The Hindu Business Line : Mixed reactions from industry

Perceptions differ
The All India Association of Industries unhappy over the omission of SMEs.
"The most appropriate response to the current economic situation," says CII
The IMC Vice-President says the hike in repo and reverse repo rates are pre-emptive moves.

Mumbai , July 25

The industry captains reacted differently to the Credit Policy announced by the Reserve Bank of India on Tuesday.

The All India Association of Industries (AIAI) has expressed its displeasure over the omission of SMEs in Credit Policy.

"The loans given to SMEs should have been at par with the interest rate of home loans in view of the importance of this sector in the economy. SMEs hold immense employment and export potential, and hence, they should be strongly supported,'' said Ms Rupa Naik, Executive Director, AIAI.

In view of 26 per cent growth in credit to the industry, the monetary policy should have stressed on the importance of timely and adequate finance to this sector, said Mr Vijay Kalantri, President, AIAI.

The Indian Merchants' Chamber (IMC) welcomed the Credit Policy announced by RBI. In a statement issued to this newspaper, the IMC Vice-President, Mr Niraj Bajaj, said the hike in repo and reverse repo rates, while keeping the cash reserve ratio and bank rate unchanged, was pre-emptive of inflationary pressures.

"India cannot remain insulated from the influence of bank rate increase in advanced countries like the US and Japan for far too long, nor can it successfully resist the inflationary pressures being generated by rising international crude price ," Mr Bajaj said.

The Confederation of Indian Industry (CII) acknowledged the Credit Policy, terming it as "the most appropriate response to the current economic situation."

The CII President, Mr R. Seshasayee, said this was unlikely to affect the demand for long-term credit, or the long-term fixed rates for corporate borrowing.

Mr Seshasayee opined that RBI acted pre-emptively to ensure that any combination of `cost push' and `demand pull' did not result in a disproportionately high inflation or high inflationary expectations.

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