Policy Matches Expectations Of India Inc

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Mumbai/New Delhi, May 18: Corporate India has welcomed the slack season RBI policy. Despite there being no major policy announcements or tinkering with the rate structure, industry leaders and associations feel that the stability in the policy and the provision of liquidity in critical areas were a welcome move.

Federation of Indian Chambers of Commerce and Industry (Ficci) said that while the Gross Domestic Product has been projected at 6.5-7 per cent for the year 2004-05, efforts will be made to enhance the growth rate to 8 per cent for the year.

The reduction in the benchmark Prime Lending Rate (PLR) by about 50 to 200 basis points is indeed a step in the right direction. This initiative should be strengthened so that the BPLR falls further, Ficci said. Ficci has also welcomed the expansion of definition of infrastructure lending, wherein the emphasis is largely on the infrastructure to agro processing and agriculture and as also on educational institutions and hospitals.

Confederation of Indian Industry (CII), the other apex industry body has said, "While GDP growth is expected to continue to be robust, there could be some concerns on inflation due to rising oil prices as well as excessive domestic liquidity."

"However, the RBI governor has shown wisdom in maintaining the current interest rate environment, arguing that the price situation is unlikely to cause concern to macro-economic stability," CII insisted.

Associated Chambers of Commerce and Industry of India (Assocham) has complimented RBI governor YV Reddy for ensuring continuity in the policy and also for taking the initiative to retain policy flexibility in the Indian monetary and financial regime, and also taking the economy steadily towards greater market determination of the exchange rate.

Larsen & Toubro CFO YM Deosthalee is of the opinion that the policy has continued with the stance as in the earlier years. "It is an attempt to balance the twin objectives of sustaining the growth momentum in the economy, while ensuring a conducive interest rate environment and ample liquidity. The clear focus of the policy on improving the credit delivery to SMEs, agriculture and infrastructure is welcome," feels Mr Deosthalee.