The Hindu : Business : Key rates may not be touched: survey

Online edition of India's National Newspaper
Thursday, Apr 28, 2005

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Business

Key rates may not be touched: survey

Special Correspondent

NEW DELHI: India Inc expects that the Reserve Bank of India may not touch the key interest rates, but would strive to rein in inflation without impacting economic growth.

An Assocham Business Barometer survey of 200 CEOs said an overwhelming 90 per cent of the respondents felt that interest rates might not move up despite challenges of keeping a lid on inflation in the wake of rising US interest rates and increase in energy and commodity prices.

The policy, however, may caution the money market on the rising global interest rates and oil prices. Over 70 per cent of the CEOs surveyed said they did not want to see any hike in the reverse Repo Rate, which is now at 4.75 per cent.

Similarly about 70 per cent of the respondents feel that Government's borrowing programme in the first half of 2005-06 could exert pressure on liquidity, while 90 per cent of them felt that the RBI should take steps to deepen the debt market, which is now more inclined towards government securities.

The survey said over 85 per cent of the respondents were of the view that the core infrastructure sector needed fresh investments mainly in coal, electricity, coal and crude petroleum.

Majority of respondents expected the RBI to earmark more funds to small and medium enterprises, while 60 per cent of them were hopeful of the central bank supporting venture capital.

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