Bouquets And Brickbats From India Inc

New Delhi, Nov 3: | Updated: Nov 4 2003, 05:30am hrs
RBI Governor YV Reddys maiden credit policy has evoked a mixed response from India Inc. While apex industry bodies like CII, Ficci and Assocham have complimented Dr Reddy, others such as Fieo have expressed disappointment.

The Confederation of Indian Industry (CII) feels it is a carefully drafted policy focussing on the need for continuity and will help to sustain the ongoing economic recovery.

Apex industry bodies have expressed satisfaction over RBIs emphasis on softer interest rates, improvement in customer services and credit delivery.

But the Federation of Indian Chambers of Commerce and Industry (Ficci) believes that the Governor could have taken concrete steps to bring down lending rates to small and medium enterprises. The industry, particularly the small and medium scale borrowers, continue to pay higher rates of interest. Even after the lowering of PLR, effective interest rates remain too high, Ficci has stated. It, however, mentioned that RBIs upward revision of GDP growth rate for this fiscal to 6.5-7.0 per cent is an encouraging sign and further enhances confidence in the economy.

CII President Anand Mahindra said, the policy focuses on the need for continuity and has been designed to take into account the excellent performance of the economy.

Given the already soft interest rate regime and the recent 50bps cut in the repo rate, we understand why RBI has kept the bank rates unchanged at 6 per cent. Similarly, given the excess liquidity, there may have been no urgency to immediately reduce the cash reserve ratio, he said, adding the higher GDP growth forecast coupled with its expectation of lower inflation will bring further good cheers to the industry.

Federation of Indian Export Organisations (Fieo) President Rafeeque Ahmed expressed disappointment, saying the policy has not addressed the issue of the appreciating rupee which has affected profitability and competitiveness of exports. He regretted that RBI has not announced any measure to support the export sector, barring a few procedural changes in the exchange control manual.

Associated Chambers of Commerce and Industry (Assocham) President RK Somany has complemented the Governor for taking the much-needed measures to improve credit delivery to agriculture and SSIs and also for simplifying procedures and instituting complete flexibility in micro-finance structure for boosting the credit flow.

PHD Chamber of Commerce and Industry (PHDCCI) President PK Jain said the policy is not come up to industry expectations. The focus seems to be on checking benign inflation and not stimulation of growth.