RBI raises repo and reverse repo rates.

Bogged with inflation concerns, RBI has raised its repo rate and reverse repo rates under the liquidity adjustment facility.

• Repo rate increased by 25 basis points to 6.0%, and
• reverse repo rate increased by 50 basis points to 5.0%

RBI says...

The measures undertaken in this review should:
- contain inflation and anchor inflationary expectations without disrupting growth.
- reduce the volatility in overnight call money rates, thereby strengthening the monetary transmission mechanism.
- continue the process of normalisation of the monetary policy instruments.

The decision was announced by the Reserve Bank of India at the Mid-Quarter Monetary Policy Review, today.

Reacting to the RBI's measures, some bankers have already said that they would have to raise their commercial lending and deposit rates.

Protectionism Round 2 - US passes 2 bills in favour of Made of America

In order to promote creation of jobs in the US, the House of Representatives has passed 2 bills that require the US Congressmen and Department of Homeland Security to only buy goods Made In America.

It seems, that the very promoters of concept of free-trade and demand-and-supply based economy have had to eat their words and move towards an "inferior" protected economy.

We hope these protectionist measure work and we see a speedy recovery of the world's largest economic power alongwith all countries of the world.

New WPI base prices announces

Anand Sharma, Union Minister of Commerce and Industry, announced a new serice of Wholesale Price Index (WPI), today.

He announced in New Delhi that the new series has been prepared by shifting the base year from 1993-94 to 2004-05 and added that WPI for the month of August 2010 has been released with base year 2004-05.

The policy makers expect the change in base to improve the accuracy and be more representative of the wholesale price index.

Resistance to outsourcing in the United States

In a major setback for the Indian IT industry when the US government reacted against outsourcing. The Indian IT industry has been a major provider of outsourcing services for American companies over the last decade.

Earlier in August, Ted Strickland, the Governor of Ohio state set a distrubing trend by passing and executive order to ban outsourcing of government projects and now last week Barack Obama, the President of US has indicated that he too is considering steps against the outsourcing. He said he was going to withdraw tax incentives of companies who outsource work that help create employment overseas (out of the US).

Two Union Ministers Kamalnath and Anand Sharma have reacted strongly to the developments in the field of outsourcing.