The Hindu Business Line : Chambers find Credit Policy progressive

India Inc has welcomed the half-yearly review of the Monetary Policy announced by the RBI on Tuesday. All the chambers welcomed the raising of the threshold limit of $2-billion investments in Government securities by foreign institutional investors to $3 billion.

The industry also drew comfort from the hike in the GDP growth forecast to 8 per cent. "The policy provides the right compass to take the economy forward," said Mr R. Seshasayee, President, CII.

The CII was particularly appreciative of the steps taken in liberalising the capital account, taking the recommendations of the Tarapore Committee on Fuller Capital Account Convertibility forward through its announcements on ECBs, EEFCs, cancellation of forward contracts, etc. Prepayment of ECB up to $300 million from the previous $200 million without prior approval of the RBI is a right move , said the chamber.

FICCI warned that the repo rate hike for a third time in a row would hit small and medium companies and adversely affect the growth process. Mr Saroj Kumar Poddar, President, FICCI, said this was bound to pinch the small and medium enterprises much more, as fund raising becomes costlier.

The Associated Chambers of Commerce and Industry of India (Assocham) called the mid-term review of the Annual Credit Policy for 2006-07 a balancing act. "The fact that the RBI has chosen to maintain stable lending rates, including for home loans and maintaining growth momentum is a good sign for keeping the vibrancy in the economy," said Mr Anil K Agarwal, President, Assocham.Both FICCI and Assocham welcomed the raise in remittance of resident individuals to US$50,000 per financial year Mr Agarwal also welcomed the move to not make home loans expensive, since housing is a priority area and the growth in the construction sector is creating lot more additional jobs.

Mr Deepak Pahwa, President, Indo-American Chamber of Commerce, approved of the target of achieving 8 per cent growth in GDP for 2006-07.