The Hindu Business Line : Growth impetus lacking

The Credit Policy announced by the RBI Governor, Dr Y.V. Reddy, has no concrete steps for boosting the economy. The measures are not sufficient for balancing price stability with the credit needs of the productive sectors..

To regulate liquidity in the market, the Cash Reserve Ratio should be reduced to the targeted rate of 3 per cent. The gap between the repo (7.75 per cent) and reverse repo (6 per cent) rates needs to be reduced for harmonisation in the relationship between the RBI and banks.

The permission for Indian companies to invest in foreign companies up to 300 per cent of their net worth with hedging for individuals and allowing outward remittances up to $100,000 are welcome measures..

To improve the quality of lending for housing, the decision to reduce risk weight to 50 per cent from 75 per cent is risky, as it can result in NPAs (non-performing assets) going up. Cheap and abundant supply of money is needed for creating demand for capital goods as well as consumer durables, but this should not be at the cost of the interests of small depositors.

M. M.Goel, e-mail

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

More Stories on : Letters | Credit Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Battle of the forex bulge

Friends of the Trees

Harnessing the forex wealth

Hawkish talk, dovish walk

Valuations need to be transparent, reliable and fair

Financial statements have become unintelligible to lay readers

Growth impetus lacking