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It has chosen to keep the bank rate, reverse repo rate,
repo rate and cash reserve ratio, besides statutory
liquidity ratio unchanged. Bank rate remains unchanged
at 6%. Reverse repo rate, which has been raised by 25
basis points on January 23, 2006, remains unchanged
this time at 5.5%. With the spread of 100 basis points,
the repo rate has in fact undergone upward revision
by 25 basis points, last time (January 23, 2006). It
remains this time, unchanged at the level of 6.5%. There
is no change in the cash reserve ratio of 5%.
The
real economy appears to be performing well as per the
report, and the real GDP growth rate is projected to
be in the range of 7.5-8% for 2006-07. Favorable monsoon
condition, buoyant services sector, higher level of
industrial production and manufacturing activity have
contributed collectively for the good performance in
the GDP. It is, therefore, no surprise that the fiscal
conditions have also improved significantly due to higher
level of tax collections and containment of growth in
non-plan expenditure.
A
major cause of concern is the inflation. It was 5.3%
in November 2005, as against 4.2% a year ago. Rising
crude oil price is considered to be the chief source
of higher level of inflation. RBI is hopeful of containing
inflation at the level of 5 to 5.5% during the year
2006-07. |
