Mumbai, September 16 (AGENCIES): Loans are set to get costlier after key interest rates were hiked by 25 basis points for the 12th time since March 2010. The price of petrol was raised on Thursday -- the 10th such increase since June 2010. If that wasn’t painful enough, there is a chance that LPG price will go up.
The Reserve Bank of India (RBI) said on Friday after its mid-quarter review of the monetary policy that the petrol price hike affected by the oil marketing companies will marginally add to upward pressures on headline inflation.
“Oil marketing companies raised the price of petrol by Rs 3.14 per litre with effect from Sep 16, 2011. This will have a direct impact of 7 basis points to WPI inflation, in addition to indirect impact with a lag,” the RBI said while hiking repo rate by 25 basis points. Automatically, the reverse repurchase rate, or interest on short-term lending, gets hiked to 7.25% from 7%, since the central bank felt inflation levels remain well above its comfort zone.
LPG next?
A ministerial group was scheduled to consider limiting supply and hike in price of liquefied petroleum gas (LPG) on Friday but its meeting was deferred indefinitely due to political pressure. The Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee was scheduled to consider the recommendations of a task force on LPG and kerosene pricing.
The panel has proposed that every household should be given only four to six LPG cylinders per year at a subsidised price and additional cylinders should be supplied on market price. Average households use 20 to 30 LPG cylinders each year. An LPG cylinder is sold at a subsidised price of Rs 395 in Delhi while the market price is around Rs 700 per cylinder. The EGoM meeting may have been deferred because of growing protests against the petrol price hike.
The Reserve Bank of India (RBI) said on Friday after its mid-quarter review of the monetary policy that the petrol price hike affected by the oil marketing companies will marginally add to upward pressures on headline inflation.
“Oil marketing companies raised the price of petrol by Rs 3.14 per litre with effect from Sep 16, 2011. This will have a direct impact of 7 basis points to WPI inflation, in addition to indirect impact with a lag,” the RBI said while hiking repo rate by 25 basis points. Automatically, the reverse repurchase rate, or interest on short-term lending, gets hiked to 7.25% from 7%, since the central bank felt inflation levels remain well above its comfort zone.
LPG next?
A ministerial group was scheduled to consider limiting supply and hike in price of liquefied petroleum gas (LPG) on Friday but its meeting was deferred indefinitely due to political pressure. The Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee was scheduled to consider the recommendations of a task force on LPG and kerosene pricing.
The panel has proposed that every household should be given only four to six LPG cylinders per year at a subsidised price and additional cylinders should be supplied on market price. Average households use 20 to 30 LPG cylinders each year. An LPG cylinder is sold at a subsidised price of Rs 395 in Delhi while the market price is around Rs 700 per cylinder. The EGoM meeting may have been deferred because of growing protests against the petrol price hike.
