The Bombay Stock Exchange benchmark Sensex was trading over 400 points lower on panic selling by investors following the RBI`s move to raise key policy rates by 50 basis points.
Leading economists have welcomed the measures initiated by the Reserve Bank of India Tuesday in reining soaring inflation saying that the price rise has become a much serious and larger issue.
Higher rates may affect the industrial output which is already lagging.
Planning Commission Tuesday endorsed RBI`s hawkish policy of hiking key rates by half a percentage point saying this would contain inflation.
In line with international practice, the RBI Tuesday decided to anchor monetary policy through a single short term lending rate known as repo rate.
The Reserve Bank today said that loans extended by banks to micro-finance institutions (MFIs) from April 1 onward will be classified as priority sector lending.
Home, auto and corporate loans are likely to cost more, with the Reserve Bank raising key policy rates by half a percentage point, bankers said Tuesday.
Monetary tightening was required to contain commodity prices, FM said.
Faced with stubborn inflation, RBI raised key policy rates by 50 basis points in its annual credit policy for 2011-12 on Tuesday to arrest the rate of price rise.
Average inflation this fiscal may ease to 6% from about 9% at present.
Public sector State Bank of India on Monday said an increase in interest rates could lead to "derailing" the growth prospects of the country.
Faced with stubborn inflation, RBI is likely to raised key policy rates by at least 25 basis points in its annual credit policy for 2011-12.
Household saving rate of an average employee in metros has come down by 45 percent in last six years due to an exorbitant increase in prices of essential commodities, fuel and education, an Assocham survey on said.
The International Monetary Fund has said that it is "absolutely normal" for countries like India and China to grow at over eight and nine per cent and experience inflationary pressure.
Plan Commission Deputy Chairman Ahluwalia Wednesday said the next plan would target GDP growth of 9 to 9.5 percent in the next five years.
A rise in global oil prices by USD 10 per barrel would reduce India`s economic growth by 0.2 percentage points and also affect the country`s current account deficit, Goldman Sach said.
Food inflation is expected to hover around 8.5 percent in the remaining months of 2011, if the monsoon remains normal as predicted by the meteorological department, according to a report.
Managing inflationary pressure-- particularly in foodgrain prices -- is the biggest challenge before policymakers, according to C Rangarajan, the chairman of the Prime Minister`s Economic Advisory Council.
India`s economy will grow around 9 percent in the fiscal year that started in April if global crude prices remain under control.
India`s headline inflation is likely to remain high this year too, registering an average of 8.6 percent in 2011-12 as manufacturers are likely to pass on input costs to consumers, global banking giant Nomura said Tuesday.
Soaring food prices, which averaged 10 percent in many economies this year, can push close to 30 million Indians and 64 million people in the Asian region into extreme poverty, an ADB report said Tuesday.
Food inflation inched up marginally to 8.76 percent for the week ended April 16 on the back of rising prices of fruits, protein-based items and onions.
The Reserve Bank said that deregulation of the interest rate on savings banks accounts would benefit savers, as it would enable lenders to come out with innovative products to attract more funds from low income households.
Stressing that monetary policy has "serious limits" in tackling rising inflation, RBI Chair Professor at ICRIER B L Pandit on Friday made a case for expediting agricultural reforms to fight price rise.
This is for the eighth time that RBI has raised the key rates since March 2010.
Sensex was red as banking, IT, auto, realty and auto stocks led the fall.
India Inc on Thursday said the continuous monetary tightening by the Reserve Bank will affect "adversely" growth prospects of the country.
The Planning Commission on Thursday said the Reserve Bank has taken the "right" step in hiking key policy rates by 25 basis points as inflation is above the comfort level.
Home, auto and corporate loans are likely to become expensive in the next fiscal following the RBI`s move to raise key policy rates by 25 basis points, bankers said on Thursday.
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