Tamil Nadu - Madurai   

Confidence in domestic economic recovery

MADURAI: The 75 bps hike in cash reserve ratio (CRR) effected by Reserve Bank of India (RBI) in its Third Quarter Monetary Policy reflects its confidence in the domestic economic recovery, the Tamil Nadu Chamber of Commerce and Industry has said.

The decision, taken against a backdrop of slow pace of global economic recovery, concerns regarding high food prices spilling to other commodities and fiscal deficient, will absorb Rs. 36,000 crore, said chamber president N. Jegatheesan. However, he added, this move was unlikely to control inflation as the increase in food prices was mainly fuelled by the mismatch between demand and supply. There would still be sufficient liquidity in the system even after CRR hike and the sector expressed hope that banks would not increase lending rates.

The chamber also called upon the Government not to opt for hasty withdrawal of the stimulus package as the economic recovery was still fragile and should be nurtured till growth stabilised, a press release said.

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