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March 18, 2008

Interest rate muddle

Finance Minister P. Chidambaram had recently conceded that there is a case for reducing interest rates to boost consumption expenditure. In particular, he noted, there is public demand that interest rates on housing loans be lowered. But with inflation rates rising, he has underlined: “We must trust the RBI to use interest rates as an instrument to contain inflation.” The central bank’s stance on interest rates is clear—inflation must be reined in before rates can be slashed. So, the FM is trying to do a delicate balancing act without taking a firm stand on where rates should be headed in the medium term.

Setting the agenda

Rahul Gandhi
Rahul Gandhi
The buzz is that the relief package for farmers might be larger than the Rs 60,000 crore earmarked for it in the Budget. Congress poster boy Rahul Gandhi has himself taken the initiative to get this figure enhanced.

He has demanded that the eligibility criteria of two hectares be increased and the stipulation of a single cut-off date be removed. What the Congress’s crown prince wants he gets. But who will foot the bill?

 — Rishi Joshi

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