RBI cuts CRR by 75 bps to 4.75%

The Reserve Bank of India (RBI) has decided to reduce the cash reserve ratio (CRR) of scheduled banks by 75 basis points (bps) from 5.5% to 4.75% of their net demand and time liabilities (NDTL) effective the fortnight beginning March 10. This reduction will inject around Rs 480bn of primary liquidity into the banking system, the RBI said in a statmenet.

In order to mitigate tight liquidity conditions, the cash reserve ratio (CRR) was reduced by 50 bps in the Third Quarter Review (TQR) in January, injecting primary liquidity of Rs 315bn into the banking system. The RBI also continued with the open market operations (OMOs), injecting primary liquidity of over Rs 12.45bn this financial year so far, of which Rs 528bn was injected after the TQR. "Despite these measures, the liquidity deficit has remained large on account of both structural and frictional factors," the RBI said.

This was reflected in the net average borrowing under the RBI's liquidity adjustment facility (LAF) rising from an average of Rs 1,292bn in January to Rs 1,405bn in February. Net injection of liquidity through LAF rose to a peak of Rs 1,917bn on March 1, though subsequently it declined to Rs 1,273bn on March 7.

Further, the liquidity deficit is expected to increase significantly during the second week of March due to advance tax outflows and the usual frontloading of cash balances by banks with the RBI, the central bank said today. The overall deficit in the system persists above the comfort level, the RBI said. "Accordingly, it has been decided to inject permanent primary liquidity into the system by reducing the CRR so as to ensure smooth flow of credit to productive sectors of the economy," the RBI said in the statement. The RBI will provide its assessment of the macroeconomic situation in its Mid-Quarter Review to be published on March 15.

The hand fails to rock...SP pedals to glory

The cat is out of the bag. In a historic victory, the Samajwadi Party has secured 223 seats in the Uttar Pradesh Assembly Polls, much above the required 202 seat majority. The party has singlehandedly won back UP from the BSP, leaving the Congress, BJP and BSP far behind. In Punjab, it looked like a close call at one point between the Shiromani Akali Dal and the Congress. However, it was the SAD-BJP alliance who finally won the majority of 68 seats, leaving the Congress behind with 46 seats. The required majority was 59 seats. Uttarakhand was a close call with the BJP and Congress vying neck and neck for the seats. While neither party could meet the halfway majority mark of 36 seats, the BJP ended with 32 seats while the Congress was a seat lesser at 31. Manipur was the sole state where the Congress was in a comfortable position. It comfortably crossed the halfway mark of 31 seats and ended with 43 seats in its kitty. In Goa, it was the BJP who emerged victorious with 24 seats, three above the required majority of 21 seats. The Congress secured 9 seats in the state. With respect to the Congress’ dismal performance in Uttar Pradesh, the party said that the General Secretary Rahul Gandhi could not be blamed for the the party’s performance. The Congress party was shocked with the outcome but has stated that it would be part of the government formation of the state. The Congress’ disappointing performance in all the states barring Manipur raises concerns about a slowdown by the Congress-led UPA in its economic reforms...Read More

The cycle outruns the elephant

Mulayam or Akhilesh? Who will be the next CM of UP?

The Samajwadi party has singlehandedly ousted the Mayawati government in Uttar Pradesh. This means, it does not require the support of any other party and can independently set it plans and work for the betterment of UP. The question is, who will be on the driver’s seat for this operation? Who will be the CM of UP, SP party chief Mulayam Singh Yadav or his son and the party’s state unit president Akhilesh Yadav? Many believe that it is Akhilesh who the people have voted for and not seeing him head the state would lead to anger and disappointment, reports said. Many MLAs and MPs are of the opinion that Akhilesh is "capable of being CM." Thirty-eight year old Ahkilesh Yadav managed to strike a chord with the people of UP as he rode his party symbol, the cycle, wearing a red cap and became the face of the party. It is believed that Akhilesh is responsible for the party’s victory at the elections. While Ahkilesh told reporters on Tuesday that Mulayam Singh Yadav will be the CM of the state, speculation is rife that Mulayam will nominate Akhilesh for the top job. Reports stated that after the glorious win on Tuesday, Mulayam Singh Yadav would likely focus on strategy for the 2014 general elections. Thus, if Akhilesh would take over the reins of the state, his father would be able to concentrate on the general elections, reports added. However, many in the party opine that Akhilesh may yet be young to handle the state of UP which is plagued by corruption, illiteracy and poverty. The party is expected to take its decision.

Rahul Gandhi speaks on UP election results

Rahul Gandhi: I want to congratulate the Samajwadi Party (SP), Mulayam Singh Yadav and Akhilesh Yadav on their victory in Uttar Pradesh.

Rahul Gandhi: I was leading the campaign in UP for the Congress party and we lost. So, it is my responsibility.

Rahul Gandhi: It is too early to analyse why it happened (the disappointing performance of Congress in UP).

Rahul Gandhi: Organisationally we (Congress) were not strong enough in UP and people supported SP.

Rahul Gandhi: I will continue my work as I promised the people of UP.

Rahul Gandhi: This (loss in UP) is a lesson for me.

Rahul Gandhi: I will take this defeat (in UP) in my stride. It will be a good learning experience for me.

Akhilesh Yadav: Law and order will be top priority

Akali Dal-BJP retain power in Punjab

After a close call with the Congress, The Shiromani Akali Dal-BJP alliance managed to attain the majority in the Punjab Assembly Polls, continuing their governance in the state. The People’s Party of Punjab did not get a single win while Independents and others got marginal wins.

Battle for Uttarakhand: Congress and BJP fight it out, BJP rules in Goa

After a photo finish on Tuesday which left the BJP with 31 seats and the Congress with 32, both parties are now trying to secure support from Independents and other parties to cross the required majority mark of 36, reports said. The BJP is confident that it would be able to form a government with the support of the others. Reports said quoting BJP leader Ramesh Pokhariyal, "There is a possibility that we (BJP) too could stake claim to form government in Uttarakhand today. We will decide on this. We expected we would win with a huge margin. Something must have gone wrong." The BJP would need the support of the BSP even if it aligns with the three independents and the Uttarakhand Kranti Dal member as it would still fall short of one seat. The BJP legislature party meeting has begun and BJP leaders Rajnath Singh and Ananth Kumar will meet legislative party members today to discuss their course of action to stake claim to form the government in the state, reports said. Meanwhile, Uttarakhand Congress leaders will meet Sonia Gandhi today to discuss their plan of action to form a government. The Congress has two options; one is that it secures the support of the three independents as well as the support of one Uttarakhand Kranti Dal member which takes their tally to 36. The second option is that the Congress could take the three independents and three BSP members on board to secure 38 seats. Both parties are busy trying to entice independent candidates.

Greek bond swap concluded successfully

Greek Board Tentatively scheduled on March 15: IMF

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