The cards are shown. The symbols are as expected. Reserve bank of India increased key rates. The major reason was inflation. What is the immediate reason for inflation, it is the budget proposal to hike the price of petroleum products. Everyone was against it but the rates are increased. It fueled the inflation figures and it ignited to 9.89 percent for the month of February. The RBI forecast was only 8.5 percent. It will touch double digit in March 2010.
In order to contain inflation RBI hiked key rates. In January also there was an increase in the Cash Reserve Ratio. Now Repo and Reverse Repo rates are hiked.

Repo Rate: 5 percent

Reverse Repo Rate: 3.5 percent

CRR: 5.75 percent

SLR Rate: 25 percent
(source- RBI website)

How will the rate hike affect the common man, in many ways is the answer. Two major reasons for inflation were higher base effect and the price hike of food articles. The latest food inflation figures are at 16.30. It eased a little bit. But still very high. What are the reasons: one, population is increasing. Two: available land for agriculture shows drastic decrease. No one is ready to produce food, everyone is ready to consume. Agriculture has lost it’s worth in modern times.
Government machinery should involve more actively in the public distribution system. Food grains should be made available in open market from FCIs (food corporation of India). Black marketing should be banned. Food cultivation should be increased. This in turn will ease the food inflation and as a result whole sale price based inflation would decrease.
Now in this changed scenario loans will become more costlier. Interest rates of car and house loans would increase. In it’s annual policy review on April 20, 2010 RBI will again increase the rates in the inflation figures still go up. Common man’s purchasing capacity will be decreased. He will spend less. Excess money will be wiped off. Red signal for market and India incorporated (some sort of consolidation would take place). The burden of living will definitely increase because the pockets are emptier than earlier now a days. No cut in fuel price can be expected in the near future. Government has passed the burden of inflation to us, now it is our duty to carry this.
Repo Rate
Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI.

Reverse Repo Rate
Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks.

CRR Rate
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.

SLR Rate
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers.