New Delhi: The RBI unveiled its macroeconomic review and its quarterly monetary policy this week. It said business sentiment is reviving and that the economic growth was likely to pick up. But the bank also warned that inflation could be a problem by the end of the year. Experts say the RBI has signaled the end of its loose monetary policy by not changing two crucial rates- the repo-rate and the reverse-repo rate. The repo rate, which is the rate at which the RBI lends cash to banks, remains 4.75%. And the reverse repo rate, which is the rate at which the RBI borrows from banks, is still 3.25%.
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Several major companies unveiled their first quarter results this week. And it was an especially good week for public sector banks. Profits of State Bank of India rose 42% in the first quarter to Rs2,330 crore. Punjab National Bank also did well, reporting a net profit of Rs832 crore, a 62% increase over the same period last year.
Steel makers continued to feel the pressure of low commodity prices in the first quarter. Net profits for Tata Steel fell 47% in quarter ending June to Rs790 crore. Steel Authority of India was also hit. Its net profits fell 28% to Rs1,326 crore.
Some automakers have had a better first quarter. Tata Motors reported a 58% increase in net profits to Rs514 crore. The company was helped by better sales and cheaper raw materials. Hero Honda also posted impressive earnings. Net profits for India’s largest two-wheeler maker rose by 83% to Rs500 crore. About 40% of Hero Honda’s sales in the first quarter came from rural areas.
The service tax department says Jet Airways still owes it money. It has completed an audit report that says Jet still has to pay the government Rs260 crore in taxes and interest.
India and Pakistan may have signed their controversial joint statement on the 16 July, but the political row over it got more intense this week. On Tuesday members of the opposition went to the President with their complaints. They said the mention of the Pakistani province of Balochistan was a grave error and that India had effectively agreed to talk to Pakistan even if it does not crack down on terrorists
On Wednesday Prime Minister Manmohan Singh defended his foreign policy, saying he had not compromised on India’s security. But the opposition wasn’t satisfied. The next day, after a statement from Foreign Minister S.M. Krishna, the opposition, led by Bharatiya Janata Party leader L.K. Advani walked out of the Lok Sabha.
Earlier that day, Congress chief Sonia Gandhi defended the Prime Minister’s response in Parliament. She said Pakistan would have to clamp down on terrorists for meaningful dialogue to take place, but made no mention of the joint statement or Balochistan.