TEXT-India's fin min comments on cbank rate moves

NEW DELHI, June 25 (Reuters) - India's finance ministry on Wednesday issued a statement commenting on the central bank's move to increase its main lending rate and banks' reserve requirements by 50 basis points each to tame 11 percent inflation.

After market hours on Tuesday, the Reserve Bank of India hiked the repo rate for the second time this month, taking it to 8.50 percent with immediate effect.

The cash reserve ratio (CRR) rises to 8.75 percent from 8.25 percent, and the increase will take effect in two 25-basis-point stages on July 5 and July 19, the bank said.

Following is the text of the finance ministry statement. ----------------------------------------------------------------

STATEMENT OF FINANCE MINISTRY ON REPO RATE HIKE:

"Last Friday, Ministry of Finance had indicated that the monetary authorities were expected to take action on the demand side to moderate inflation and quell inflationary expectations.

"Reserve Bank of India has hiked the repo rate by 50 basis points and the CRR by 50 basis points (in 2 stages). These steps are expected to have a salutary effect.

"These steps are necessary in the face of rising inflation due to relentless increase in crude oil prices. On June 20, the trading day preceding the Jeddah meeting, crude oil price on the NYMEX was $134.63 per barrel. This morning, it is $136.80 per barrel.

"On the positive side, as Minister of Agriculture has noted, we have very satisfactory stocks of wheat and rice; adequate supplies will be provided to the PDS (public distribution system); and the stocks will be sold in the open market, when necessary, to restrain prices.