Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia has said that the cut in the Cash Reserve Ratio, CRR, by the RBI is a welcome step in the right direction. Talking to reporters in New Delhi, he said, that CRR cut should be looked at in totality with steps taken by the government. He said this will build confidence.

Prime Minister's Economic Advisory Council (PMEAC) today said the RBI move to infuse liquidity in the system is more potent than a cut in interest rate and it will help banks expand credit portfolio.Chairman of the PMEAC , C Rangarajan told a private news channel that the RBI has taken a cautious step. He said the RBI recognised certain steps taken by the government and slashed CRR though the cut is not a big reduction.Rangarajan said the RBI policy in the coming weeks will depend upon how inflation behaves.He said, the country may see a pick up in the economic activity in the 2nd half of the 2013 fiscal.

AIR correspondent reports,in its mid-quarter monetary policy review, the RBI kept the key policy rate unchanged in view of high inflation but reduced the Cash Reserve Ratio,the portion of

deposits that banks keep with the RBI. The move will infuse 17,000 crore rupees in the banking system.