Industry & Economy
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Budget
Investments made cost-competitive with duty cuts
Mr R. Seshasayee, Managing Director, Ashok Leyland
"A STABLE and buoyant capital market, a benign inflation level and affordable interest rate, together make for a good investment climate. The FM has further sweetened it with customs duty cuts in a range of capital goods, making investments cost competitive.
"Through marketing of massive rural credit, the FM seeks to repeat in rural India, the essentially urban magic of EMIs and plastic money. A credit flow of over Rs 1,00,000 crore to be managed innovatively by banks adopting the agency model, using existing infrastructure, with a 30 per cent hike in disbursement in 2005-06, is a turning point in bridging the India-Bharat divide. It will not be long before rural India becomes a vast and still expandable market.
However, crucial to credit flow to rural market is the employability and hence the credit worthiness of the borrowers. Hopefully, Bharat Nirman will constructively address this, through capturing the locus of job creation in the non-urban areas.
"While the provision for public investment has been modest, the FM has conclusively stepped out of the traditional sources of budget funding to seek collaboration with RBI to find $2.5 billion through the use of FE reserves. While this move will have its critics, hopefully this will be used as a front loaded catalyst to ensure the viability and to leverage further funds flow."
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