| Credit Policy: Industry bodies give thumbs up |
| BS Reporter / New Delhi April 24, 2007 |
| Leading industry associations welcomed the annual monetary and credit policy of the Reserve Bank of India (RBI). While initiatives like pre-payment of extra commercial borrowing (ECBs) without prior RBI approvals with a limit of $400 million, enhancing the overseas investment limit for Indian companies from 200 to 300% of their net worth were applauded, the associations felt that there was a need to adjust the recent hike in bank rate, reverse repo rate and repo rate. The industry chambers have praised RBI for setting realistic target of controlling inflation rate at 4-5% and maintaining Gross Domestic Product (GDP) at 8.5%. CII With no upward increase in key rates and announcement that SMEs would be permitted to book forward contracts without underlying exposures or past records of exports and imports through authorized dealers with whom the SMEs have credit facilities, RBI could not have announced a more appropriate monetary policy, R Seshasayee, president, Confederation of Indian Industries (CII) said. CII was particularly appreciative of the measures, which indicate that RBI is keenly following the effect of rupee appreciation on exports. Commenting on the macroeconomic targets set by the central bank, the forecast of 8.5% GDP growth for 2007-08 was welcomed. In this context, the increase in the target money supply to 17-17.5% is welcome, said Seshasayee. However, CII expressed concern about the compatibility of 4-5% inflation rate with high growth rate trajectory over the medium term, which India needs to aspire for. "We need to move to a system by which a more disaggregated approach is adopted for inflation monitoring and management." FICCI Apart form applauding the RBI on targeting controlled inflation rate upto 5 per cent, enhancing the overseas investment limit for Indian companies from 200 to 300 per cent of their net worth and limiting prepayment for ECBs, the Federation of Indian Chambers of Commerce and Industry (FICCI), has stated that his is in line with the recommendations of the Tarapore Committee on Capital Account Convertibility (CAC) and Percy Committee on IFC and clearly shows RBI |
