While the Reserve Bank of India (RBI) is likely to
maintain its policy rate at current levels, the financial markets expect
that the central bank would reduce the Statutory Liquidity Ratio (SLR)
In the last bi-monthly policy review on August 5, amidst
uncertainty over the progress of the monsoon, the RBI had kept the short
term indicative lending rate (repo) at the current level of 8 per cent and
the Cash Reserve Ratio (CRR) unchanged at 4 per cent. However, SLR was
reduced from 22.5 per cent to 22 per cent with effect from August 9. In the
June bi-monthly policy also, the central bank had cut SLR by 50 basis points
from 23 per cent to 22.5 per cent.
SLR is the portion of deposits banks are required to
maintain in the form of gold or government securities, before providing
credit to customers. CRR is the portion of total deposits of customers,
which commercial banks have to hold as reserves either in cash or as
deposits with the central bank and the repo rate is the rate at which the
central bank lends money to banks.
In the last policy review, Dr. Rajan said that “The idea
behind the SLR cut is that if government finances are improving and the
government is on a fiscal consolidation mode, we can afford to liberate more
access to government financing and make it possible for the private sector
and public sector firms to get access to that financing.”
Prime Minister Narendra Modi launched the ‘Make in India’
campaign at a high-profile event, which captains of industry from India and
abroad immediately joined by committing multi-crore investments and projects
in the presence of Mr. Modi.
Speaking on the occasion, Aditya Birla Group chief Kumar
Mangalam Birla said his steel-to-software conglomerate already had its
manufacturing base in India and now planned to leverage its global
production facilities for bringing technology here.
The head of India’s largest private sector company,
Mukesh Ambani of Reliance Industries (RIL), called the launch of the
campaign a historic day for Indian industry and said, “We are committing
ourselves to the movement our beloved Prime Minister had given to 1 billion
Indians on Independence Day… The uniqueness of his leadership is that he
dreams and he does.”
Unveiling the campaign logo earlier, Mr. Modi said “FDI
should be understood as ‘First Develop India’ along with ‘Foreign Direct
Investment’” while encouraging investors not to just look at India as merely
a market but also as an opportunity.
The Prime Minister also noted that India ranked low on
the “ease of doing business” index and said he was sensitising government
officials to the need for “effective” governance.
The government said it had begun the process of reviving
five ailing PSUs and is working on one-time settlement, involving voluntary
retirement scheme entailing a cost of Rs.1,000 crore for employees of six
state-run units not capable of revival.
“The state-run units, which have been identified by the
government for revival, include HMT Machine Tools; Heavy Engineering
Corporation; NEPA; Nagaland Paper & Pulp Co; and Triveni Structurals,” Union
Heavy Industries & Public Enterprises Minister Anant Geete said.
Mr. Geete said the government was working on a one-time
settlement proposal for six terminally ill PSUs, which could not be revived,
to eliminate higher recurring expenditure.
“The six companies which cannot be revived are: Hindustan
Photo Films; HMT Bearings; HMT Watches; HMT Chinar Watches; Tungabhadra
Steel Products Ltd; and Hindustan Cables. These six companies have employee
strength of 3,603,” the Minister said at a press conference to mark the 100
days of the NDA government here.