Ashok Dasgupta

NEW DELHI: Concerned at the rising inflation, which soared to 7 per cent, the Reserve Bank of India, as part of its tight money policy to suck out liquidity, may go in for a hike in the short-term lending and borrowing rates.

Else, it may resort to an increase in the cash reserve ratio (CRR) to squeeze money supply as banks will have to keep additional statutory deposits with the central bank.

In fact, fearing such stringent action in its April 29 annual credit policy, the 30-share sensitive index (Sensex) of the Bombay Stock Exchange shed 489 points at the close of the day’s trading.

The wholesale price index (WPI) inflation data for the week ended March 22 showed that the prices of fruits and vegetables rose by one per cent, gram by three per cent, masur by two per cent and urad and moong by one per cent each. Eggs, meat and fish were also dearer by one per cent.

Edible oil price up

Among manufactured items, the price of sunflower oil jumped by nine per cent and vanaspati by four per cent, while mustard oil, groundnut oil, sugar and butter were costlier by one per cent each. Alongside, the index of the mineral category soared by 38.2 per cent, mainly owing to a 46 per cent spurt in iron ore prices.