The Hindu Business Line : India Inc says policy is `pro-growth'

INDIA Inc on Thursday welcomed the Reserve Bank of India's move to leave the interest rates unchanged as part of Credit Policy and termed the policy "pro-growth". The industry chambers also welcomed the measures aimed at improving credit flow to farmers and small and medium enterprises.

The Associated Chambers of Commerce and Industry of India President, Mr Mahendra K. Sanghi, has "appreciated the stance of the Credit Policy to maintain the continuity of current levels of bank rate (6 per cent) and CRR (5 per cent) and assurance to provide appropriate liquidity to meet credit growth and support investments and export demand".

"The proposal to increase the credit limit for farmers through the produce marketing scheme from Rs 5 lakh to Rs 10 lakh and for micro finance agencies to access external commercial borrowings up to $5 million in any financial year will encourage growth in the agriculture and informal sectors," the Confederation of Indian Industry President, Mr Sunil Kant Munjal, said.

The Federation of Indian Chambers of Commerce and Industry President, Mr Onkar S. Kanwar, said that the monetary stance adopted by the RBI would provide sufficient liquidity and credit flow to industry to sustain investment for capacity expansion and growth. The increase in the reverse repo rate would give time for the industry to adjust to the emerging situation, he added.

However, the PHD Chamber of Commerce and Industry President, Mr K.N. Memani, said that in the backdrop of interest rates firming up, "the Bank Rate should have been brought down from 6 per cent to at least 5.5 per cent."

While we need to increase the growth rate of GDP, the goal of maintaining price stability is equally important and the calibrated approach adopted by the central bank in this context will sustain investor confidence, Mr Kanwar said.

With the oil price increase likely to be passed through in the coming months, the CII expects the inflation in 2005-06 to be at the higher end of the RBI's estimate of 5-5.5 per cent.

The Chamber said that it is very important to increase the flow of credit to small and medium enterprises, adding that one of the inhibiting factors has been the lack of widely available information on their creditworthiness.

The FICCI also stressed on the need to reduce the spread between the borrowing and the lending rates, particularly for small and medium companies to enable them to raise resources at globally competitive prices.

NEW DELHI: The Federation of Indian Export Organisations has welcomed the monetary and credit policy. In particular, the FIEO has hailed the move to raise the overseas investment limit for companies from 100 per cent to 200 per cent of their networth.

In a statement, the FIEO President, Mr O. P. Garg, said that this would encourage Indian exporters and investors to aggressively invest overseas. He also welcomed the relaxation in the booking of forward contracts by exporters/importers. — Our Bureau

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