1400 HRS
29th January, 2013

THE HEADLINES

• RBI cuts repo rate by 0.25 per cent to 7.75 per cent; Inflation rate moderated to 6.8 per cent from earlier projection of 7.5 per cent.

• Government to cut fiscal and current account deficits to help economy return to 8 per cent growth path, says Finance Minister.

• In Karnataka, 13 BJP MLAs submit resignations to  Speaker.

• Supreme Court dismisses plea seeking shifting of Delhi gangrape case trial to outside the national capital.

• Rajasthan High Court stays state government's decision for giving four per cent additional reservation to Gujjar and four other communities.

• Government constitutes an expert committee headed by Advisor to PM, Sam Pitroda to review institutional framework of Prasar Bharati.

• Sensex loses 71 points in afternoon trade.

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The Reserve Bank today slashed its key interest rates by 0.25 per cent and released 18,000 crore rupees additional liquidity into the system to perk up growth through to reduced cost of borrowing. RBI Governor D Subbarao in the third quarter monetary policy review, surprised the market by cutting short-term lending rate called repo, by 0.25 per cent, to 7.75 per cent and Cash Reserve Ratio, CRR, by a similar margin, to 4 per cent. While the repo rate cut will reduce the cost of borrowing for individuals and corporates, the reduction in CRR, which is the portion of deposits that banks have to park with RBI, would improve the availability of funds. Unveiling the policy review in Mumbai, Mr. Subbarao said, the stance of monetary policy in this review is intended to provide an appropriate interest rate environment to support growth as inflation risks moderate.

"The policy document spells out three broad contours of  our monetary policy stance .These are, first, to provide an appropriate interest rate environment to support growth as inflation risks moderate. Second, to contain inflation and anchor inflation expectations and third, to continue to manage liquidity to ensure adequate flow of credit to the productive sector of the economy."

The RBI, however, has reduced the growth projections for the current financial year to 5.5 per cent from its earlier estimate of 5.8 per cent. On inflation, it moderated the rate to 6.8 per cent for March-end from it's earlier projection of 7.5 per cent. The repo rate was cut last in April 2012. Inflation has been the prime inhibiting factor that has prevented the RBI from cutting repo rate in the last nine months, which have seen a host of liquidity infusing measures like a cut of 1.75 per cent in CRR, government bond buy backs and a one percentage point cut in SLR. Mr. Subbarao praised government's recent reform measures including liberalisation of FDI in retail, deferment of GAAR and progressive deregulation of fuel prices. He said, these actions will help engender stable macro-economic conditions and return the economy to its high growth trajectory. Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia said, the CRR cut will have an impact on long term interest rates. We spoke to senior Journalist Surojit Gupta of the Times of India about the latest RBI move.

"Cut in the interest rate will definitely translate into lower rates mostly for consumer loans, home loans and also for investment. So the RBI Governor has taken into consideration the concerns in the economy and has given a balanced policy. But the ball is in the government court to usher in  reforms, improve supply and basically take care of the concerns at inflation front. Over all, I think its a positive policy and will definitely help in boosting growth."

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The Prime Minister's Economic Advisory Council Chairman, C Rangarajan said in New Delhi today the that Reserve Bank's decision to cut interest rates will stimulate investment and help in anchoring inflationary expectations. Mr Rangarajan said that this balanced view of RBI will ensure that stimulus is provided to growth. He pegged inflation during the 2013-14 fiscal at 6 per cent, lower than one percentage point from 7.18 per cent in December 2012.

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Assuring India's commitment to pursue economic reforms, Finance Minister P Chidambaram has said that the government will cut fiscal and current account deficits to help economy return to the 8 per cent growth path. Speaking to a gathering of around 200 representatives of leading European companies, banks and other financial institutions in Frankfurt, the Minister said, the economy was on the right path to achieve growth levels recorded during 2004-2008. The Minister further said that fiscal deficit and current deficit were the main problems facing the economy. Outlining the measures taken by the government to reduce fiscal deficit, the Minister said, under no circumstances, would he allow it to breach the 5.3 per cent of Gross Domestic Product in the current financial year.The government proposes to reduce fiscal deficit to 4.8 per cent in the next financial year. India's promotion drive in Germany's financial capital to woo more European investors was hosted by Deutsche Bank and Barclays Bank. Mr. Chidambaram had held similar meetings in Hong Kong and Singapore to woo investors. India has been growing at an impressive rate of even 9 per cent before the global financial meltdown pulled the growth rate down to 6.7 per cent in 2008-09. The growth in the current financial year is estimated at 5.5 to 5.7 per cent.

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In Karnataka, 13 BJP MLAs submitted their resignation to the Speaker K.G Boppaiah today. The MLAs claiming allegiance to B.S.Yeddyurappa, had tried to submit their resignation letters on the 23rd. But the absence of the Speaker had forced them to wait till today.These MLAs had also complained to the Governor  about the absence of the Speaker.The General Secretary of the Karnataka Janata Party,  Laxmi Narayana informed that one more BJP MLA,Ted-e-kede Suresh will also submit his resignation to the Speaker in the afternoon.This brings the total number of MLAs resigning to 14.  Our Correspondent adds that if these resignations letters are accepted, then the Legislative Assembly strength will come down from 223 to 209.  For a simple majority, the government needs the support of 106 MLAs. At present, the BJP has the support of 107 MLAs including the Speaker, an Independent  and a nominated member. We have a report:

"The process of receiving resignation letters of 13 MLAs continues in Speaker's chamber. Every MLA is being called individually and resignation letters are being received from them by the Speaker. Speaker, who returned to Bangalore yesterday, is schedule to brief the press about his absence and confirm the receipt of resignation letters. On the other hand, two BJP members of Legislative Council submitted a petition to Legislative Council Secretary demanding action against five MLCs for their anti-party activities. Sudhindra, AIR NEWS, BANGaLORE."

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The Supreme Court today dismissed a plea to shift the trial in Delhi gangrape-cum-murder case to a place outside the national capital. A bench headed by Chief Justice Altamas Kabir rejected a transfer petition which was filed on behalf of one of the six accused in the gangrape-cum-murder case of a 23-year-old paramedical student.

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The Rajasthan High Court has stayed the state government's decision for giving 4  per cent additional reservation to Gujjar,  Raika-Rebari, Gadia Luhar and Banjara communities. Today  division  bench of the Rajasthan High Court presided by Justice N.K. Jain stayed this order. The final hearing of this case will be on 19th February.  Earlier on the 28th November The Rajasthan Government  announced  to provide 4% more reservation in government jobs  to Gurjar and 4 other communities  under the Special Backward  Category. This decision was taken on the basis of the report of the Rajasthan OBC Commission. This commission studied and examined quantifiable data with regard to Gurjar and other communities representation in the state services and made its opinion accordingly. This decision was challenged by a petitioner Manoj Solanki that it will provide 54 per cent  reservation which is a violation of the Supreme Courts order.

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The government has constituted an expert committee to review the institutional framework of Prasar Bharti. The seven-member committee will be headed by the Advisor to the Prime Minister on Public Information Infrastructure, Sam Pitroda. The committee will review the relationship of Prasar Bharti with the government, its continuing role as a public broadcaster and measures needed to ensure its technical upgradation. It will also suggest ways of using the new media to deliver digital content both in broadcast mode (DTH) and in a demand based mode like YouTube.

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Information and Broadcasting Minster Manish Tewari today said all stake holders in the broadcasting sector should introspect on Television Rating Points (TRP) and its relationship to sensationalism of broadcast content. Inaugurating the three day BES Expo 2013 in New Delhi, Mr. Tewari said, the recent exponential growth of the media, especially the social media has also to be viewed in the backdrop of the Right to privacy and the Right to anonymity. Mr. Tewari said, it is also worthwhile to ponder whether freedom of speech can extend to the freedom to offend. The Minister said, self regulation is best for human affairs and for orderly development, and any enabling regulatory architecture has to keep pace with technology.

"As we go ahead and as we innovate and as we make the broadcasting paradigm all the more pervasive, all the more people friendly, I think it may be worthwhile of the people in the broadcasting industry to also seriously introspect as to what kind of an enabling regulatory architecture, what kind of statutory landscape do law makers need to put in place to enable that this change is more orderly."

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The Information and broadcasting Minister said, India treats and respects every citizen alike under established constitutional guarantees and it would serve better for Pakistan Interior minister Rehman malik to worry about and work towards improving the plight of minorities in his country. Mr. Tewari said this while replying to questions by reporters on Pakistan's  Interior Minister Rehman Malik's comments on providing security to Bollywood star Shahrukh Khan.  Mr. Tewari, also said that under the terms of a democracy, the way the minorities are treated is more important.

"The test of democracy is not how you treat your majority, the test of democracy is how do you treat your minority. And the UPA government under the Indian Constitution has endeavoured to treat each citizen and each individual with the same respect, the same equanimity which the Constitution entitles him to."

Reacting to Pakistan Interior Minister Rehman Malik’s statement, Home Secretary R K Singh asserted that India is quite capable of providing security to its citizens. Talking to reporters in New Delhi this morning, Mr Singh advised Mr Malik to look after the security of Pakistani citizens and not worry about the Bollywood star. The Congress Party said Rehman Malik should not interfere in India’s affairs. Talking to the media in New Delhi, party spokesperson Rashid Alvi said the country knows how to take care of its people. BJP spokesperson Mukhtar Abbas Naqvi said India is a secular country and Pakistan should be worried about its own minorities.

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The Rajasthan Police has summoned sociologist Ashis Nandy for questioning in connection with the controversial remark he made against the Scheduled Castes, Scheduled Tribes and Other Backward Classes at the Jaipur Literature Festival, JLF, on Saturday. An FIR was lodged against him under Section 506 IPC (Criminal Intimidation) and the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act. 

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In Andhra Pradesh, seven Congress MPs from the Telangana region  today held an emergency meeting to decide whether they should resign to demonstrate solidarity with the cause of a separate state. The MPs are also said to be drafting a letter to Congress President Sonia Gandhi on the issue.  Following the meeting,  they told reporters that a decision will be taken this evening over their proposed resignations for the party and Parliament.

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The Sensex at the Bombay Stock Exchange fell  31 points, or 0.2 per cent, to 20,072 in early trade, this morning, on investor caution ahead of the Reserve Bank's monetary policy review. Later, after the RBI cut the repo rate and the CRR, the Sensex gained ground for some time, before relinquishing all its gains, to stand 71 points, or 0.4 percent in negative territory, at 20,032  in afternoon trade, a short while ago