Delhi government to give 3 extra subsidised cooking gas cylinders

New Delhi: The Delhi government will give three subsidised cooking gas cylinder to the poor under its scheme to remove all kerosene stoves in the state. These will be in addition to the six subsidised cylinder limit announced by the central government on Friday.

The state government has undertaken a plan to remove all kerosene stoves used for cooking purposes. As part of this, it gives one cylinder and a stove free to families that use kerosene stoves. Now this scheme will extend to three subsidised LPG cylinders per family.

This will mean that each family will now get nine subsidised cylinders a year, beating the central government's cap of six. All cylinders above this cap will have to be bought at the market price, which is about Rs. 700. A subsidised cylinder costs Rs. 400.

The central government on Friday announced the limit in a bid to reduce its subsidy bill. But there are reports that this limit might be relaxed to overcome political opposition, specially from UPA ally Mamata Bannerjee.

CRR cut by 0.25 per cent, repo rate unchanged

New Delhi: The Reserve Bank of India (RBI) on Monday cut the cash reserve ratio by 25 basis points to 4.5 per cent, increasing liquidity flow into the economy. However, it left the key bank rate and the repo rate unchanged, saying inflation risks as well as growth risks persist and the primary focus of monetary policy is fighting inflation, a move that many called conservative.

"In the current circumstances, lowering policy rates will only aggravate inflationary impulses without necessarily stimulating growth," RBI governor D. Subbarao wrote in the monetary policy review.

CRR cut by 0.25 per cent, repo rate unchanged

New Delhi: The Reserve Bank of India (RBI) took the government’s reforms rendition a note higher today by cutting its key cash reserve ratio from 4.75 per cent to 4.5 per cent to increase liquidity flow into the economy.

The CRR stipulates the minimum proportion of deposits that banks must hold with the central bank. When the RBI increases the CRR, banks have fewer funds to lend or invest since they have to park more money with the RBI.

After the government announced a hike in the price of diesel and followed it up with some big-ticket reforms late last week, India Inc. has been clamoring for a rate cut from the central bank. Amid slowing growth and downgrades from global investment banks—some even threatening a downgrade to junk status—the RBI has steadfastly said controlling inflation is its key priority.

"Controlling inflation is the top most priority of the central bank," Chakrabarty told students of a city college in New Delhi on Friday, 14 September 2012, when inflation numbers for August were released by the government.

After falling a bit in the previous month, inflation rose to 7.55 per cent in August, driven by higher prices of potatoes, wheat and pulses which rose due to poor monsoons.

The spike in August's Wholesale Price Index was also driven by a rise in the prices of manufactured items, further whittling down the efforts of the monetary authority to batten down inflation.

Chakrabarty admitted that the nearly two-year-old rate hikes to combat inflation have had an impact on growth, driven by slowing investments. "We agree that investment has slowed down due to higher interest rate."

In its previous policy review end-July, the RBI left interest rates unchanged for the second time since June, in line with expectations, while cutting its growth forecast and lifting its inflation outlook as economic conditions deteriorated.

However, it cut the statutory liquidity ratio (SLR, the amount that commercial banks have to maintain in liquid assets, such as gold or cash) to 23 per cent from 24 per cent, effective August 11.

"In the current circumstances, lowering policy rates will only aggravate inflationary impulses without necessarily stimulating growth," RBI governor D. Subbarao wrote in the previous monetary policy review, adding the central bank's primary focus remains inflation control.