The Hindu : Tamil Nadu / Coimbatore News : CII Coimbatore commends credit policy

Online edition of India's National Newspaper
Wednesday, Nov 01, 2006
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Tamil Nadu

Tamil Nadu - Coimbatore

CII Coimbatore commends credit policy

Special Correspondent

Coimbatore: The Confederation of Indian Industry (CII), Coimbatore zone, has described the credit policy announced by the Reserve Bank of India as "very balanced and forward looking" and also "progressive".

In a statement here, the chairman of the zonal unit, Jayakumar Ramdass, said that while the 25 basis points increase in the repo rate would effectively sound the note of caution on the liquidity front, keeping the bank rate and reserve repo rate unchanged signalled the RBI's commitment towards growth. He also observed that industry was particularly impressed by the bold steps taken by the RBI in liberalising the capital account. Its policy would give greater flexibility to the corporate sector in prepayment of their external commercial debts. "This also indicates the RBI's confidence in the fundamentals of the economy where it does not mind large amounts of foreign exchange coming in and going out at short notice."

The increase in ceiling of overseas investment by mutual funds from $ 2 billion to $ 3 billion was also a move towards more liberal capital account convertibility.

Similarly, he was happy to note the enhancement in the limit of investments in Government securities by foreign institutional investors from $ 2 billion to $ 3.2 billion by March 31, 2007. "This will allow larger FII inflow to be utilised in public investment undertaken by the Government."

Mr. Ramdass said that industry drew heart from the enhancement of the GDP growth forecast by RBI to eight per cent and also from the sense of continuity that was evident from the RBI Governor's announcements.

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