Economy Update

RBI SURPRISES WITH 50 BPS RATE CUT, KEEPS CRR UNCHANGED

The Reserve Bank of India cut its policy repo rate to 8.00 percent, compared with expectations for a 25 basis point.

India's central bank cut interest rates first time in three years by an unexpectedly sharp 50 basis points to give a boost to flagging economic growth but warned that there is limited scope for further rate cuts. 

STRUCTURAL ISSUES TO KEEP RUPEE WEAK NEAR-TERM: ANALYSTS

The rupee is likely to remain weak in the near-term as factors like low capital inflows and high current account deficit are expected to take their toll, industry experts feel. 

"Unless structural issues like high current account deficit (CAD) and balance of payment (BoP) situation improve, the rupee is likely to remain weak in the near future," said Indian Overseas Bank general manager, treasury, T S Srinivasan

CII ASKS PM TO FAST-TRACK ECONOMIC REFORMS

Confederation of Indian Industry has asked Prime Minister Manmohan Singh to fast track economic reforms, which in turn would boost investments and accelerate growth, chamber's new president Adi Godrej said.

On the economic growth, Godrej said with GDP growth at 6.9 per cent in 2011-12 vis-a-vis 8.4 per cent in the previous two years, the Indian economy is currently in the midst of a slowdown

The government expects the growth rate to rise to 7.6 per cent during 2012-13 from the 6.9 per cent in the previous fiscal.

Godrej said to revive investment sentiment; the RBI needs to cut the interest rates by 100 basis points by December, 2012.