Though concerned over the rising inflation, finance minister P Chidambaram does not expect any further easing of liquidity in the system.
He said it nobody was going to cut the statutory liquidity ratio (SLR) now given the current situation. According to him, the problem today was inflation, he emphasised.
The current SLR is a mandatory 25 per cent, which all banks are required to maintain as deposits in government bonds.
The FM said that inflation was the price that "we are paying for our success. Money coming in various sectors is feeding inflation." The government had yesterday cut customs duty on 11 product categories and today it slashed customs duty on edible oils.
He said his ministry has already taken measures on fiscal side to arrest inflation, like cutting customs rates that reduces the government's revenues by Rs3,000 crore.
RBI is taking monetary measures, he said, adding steps like increasing supply of food products are not short-term measures. While pulses production has been stagnating, demand has increased by 20 per cent, he said.
President A P J Abdul Kalam assented to an ordinance empowering RBI to cut it below 25 per cent, which amends the Banking Regulation Act, 1949, ahead of the quarterly credit review, due on 31 January. (See: President assents to SLR ordinance)
also see : President
assents to SLR ordinance