Liquidity issues addressed, says PM's adviser

Prime Minister’s Economic Advisory Council Chairman Suresh D Tendulkar on Monday said concerns over liquidity tightness have abated to some extent, and any further steps would depend on the Reserve Bank of India’s (RBI) assessment of the overall situation.

“To some extent, these concerns have been assuaged.... Further steps would be a matter of assessment for the RBI,” Tendulkar said.

If the call rate stays within the corridor of reverse repo and repo, further steps would not be required, he said.

“So long as the call rate stays within the corridor of repo and reverse repo, there should be no need (for further steps),” he said.Since the last one month, RBI has cut banks’ Cash Reserve Ratio by 350 basis points, repo rate by 150 bps, and the Statutory Liquidity Ratio by 1 per cent 24 per cent to ease the liquidity situation.The inter-bank call money rate has eased to 7.50-7.60 per cent after having risen to 23 per cent last month.

He said the government and the RBI were trying to address concerns over growth in the wake of the global slowdown.

“We (India) are basically experiencing the consequences of a meltdown ... we are not contributing to it. The consequences on growth is what we are trying to address,” he said.