The Reserve Bank of India left interest rates on hold on Tuesday but cut the cash reserve ratio for banks by 50 basis points, a move that eases tight liquidity in the banking system and underscores a policy shift from fighting inflation to reviving growth.
Following are views of industry officials after the RBI statement:
Hm Bharuka, Managing Director, Kansai Nerolac
"There is no need to reduce rates in a hurry and what the Reserve Bank has done is right. There needs to be clear signals from the economy, and it is only right for them to wait. The housing industry, which has been asking for a cut has not reduced prices. The fund flow to the housing sector has to be controlled as that has pushed up inflation to these high levels.
The CRR cut is something we are not sure about as additional liquidity in the system could be more inflationary. We are hopeful that the two pauses have been good and from March the industry is expecting a rate cut to boost growth."
(Kansai Nerolac is a paint maker)
Pramod Chaudhari, Chairman, Praj Industries
"The decision will definitely act as a stimulus for growth; with inflation partly under control, growth is definitely a priority. The actual impact will take some time. (With capital) available for circulation, may be, planning for 2012/13 could be on a robust footing now."
(Praj Industries is a renewable energy technology company)
N Shridhar, Group Director, DB Realty
"The cuts would bring down interest rates, and as interest rates would get slightlty moderated I would assume that corporates would kick-start their capex plans. This is a step in the right direction, hopefully to stimulate growth. There was a lot of pressure on corporate earnings, given that money was tight and interest rates moving up."
(DB Realty is a real estate developer)
