MTECHTIPS

MTECHTIPS:-India inflation falls slightly to 9.73% in Sept, further rate cuts unlikely

India’s Consumer Price Index (CPI) has fallen to 9.73% in September on a year-on-year basis compared to 10.03% in August 2012. However, the marginal fall in inflation figures may not prompt the Reserve Bank of India to go for policy rate cuts, according to analysts.On September 17, 2012, RBI had announced a 25 basis points cut in Cash Reserve Ratio bringing more liquidity in the system even as it raised concerns about inflationary trends in the economy.According to Harun R Khan, Deputy Governor, RBI, “CRR is also a potent monetary policy tool and should help in lowering the cost of credit and augmenting its supply, thus improving credit flows. The CRR cut was in addition to a 50 basis point policy rate reduction that the Reserve Bank had effected in April 2012 in anticipation of action for fiscal consolidation and supply-side initiatives.”After a dry spell in the beginning, rains picked up during the South-West monsoon from June to September raising hopes of improved production in Kharif season and better soil moisture for the coming rabi crop, analysts said.Indian economy is witnessing a slowdown and may record a growth of 5.5 to 6% in 2012-13 as against 8-9 percent levels in previous years as Eurozone debt crisis and global slowdown had its impact on economic growth in the country.