“We should not be overly concerned about short-term adjustments in the liquidity situation,” , Planning Commission Deputy Chairman Montek Singh Ahluwalia said. RBI, which reviews its quarterly policy on January 29, is widely expected raise banks’ cash reserve ratio, the level of deposits that banks must keep in cash, by 50 basis points.
But analysts are equally divided over when the RBI will start raising policy rates.
Ahluwalia said global slowdown and local regulatory issues had hit infrastructure investments, which would see the country miss its 2007/12 investment target of US$500 billion.
“The government still aims to achieve investment of 9 per cent of gross domestic product in the infrastructure sector by 2011/12,” Ahluwalia said.
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