The Hindu : Business : Mixed response to RBI measures

Online edition of India's National Newspaper
Wednesday, Apr 25, 2007
ePaper

Business

Business

Mixed response to RBI measures

Special Correspondent

CII chief hails move to contain rupee

NEW DELHI: The absence of any upward increase in key rates in the monetary policy announced by the Reserve Bank has cheered industry which was apprehending another attempt at tightening money supply. Exporters, however, struck a note of dissent over the absence of any measure to counter the appreciation of the rupee vis-à-vis the dollar and lower the cost of credit.

"Under the current circumstances, the RBI Governor could not have announced a more appropriate Monetary Policy," noted the Confederation of Indian Industry (CII) President R. Seshasayee. "RBI has responded remarkably well to developments in the Indian economy," observed Federation of Indian Chambers of Commerce and Industry (FICCI) chief Habil Khorakiwala. "We are disappointed over the lack of initiative to counter the losses incurred by exporters due to rupee appreciation especially those unaware of the intricacies of a risk covering instrument," said Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta. "With no upward increase in key rates, the RBI Governor has sent a clear indication that he would like to see the effects of the earlier rate hikes play out before taking any further measures in this area. Also it is an indication of the RBI's acknowledgement that growth cannot be traded off in the combat against inflation," added the CII chief. The CII President was particularly appreciative of the measures which indicate that the RBI is keenly following the effect of rupee appreciation on exports.

The various measures announced in the policy, which also indicate certain degree of liberal approach to outward flow of foreign currency, are welcome under the present conditions since they would have a sobering effect on the appreciating rupee, he added.

On the whole, said FICCI, RBI has finally taken cognisance of the needs of the middle class willing to buy their own homes by reducing risk weightage marginally on loans up to Rs. 20 lakh. "We hope this measure is not temporary but carried forward into the long term. The RBI has made it very clear that it would make all efforts to contain inflation between four and five per cent. While this is a laudable objective, FICCI hopes the RBI will not take harsh measures as it had done in the past to hit credit growth, which would have an adverse impact on the GDP growth rate," said Mr. Khorakiwala.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section