The Hindu Business Line : RBI commitment to stable rate regime welcomed

While appreciating the RBI's commitment towards maintaining a stable interest rate regime, Mr Y.K. Modi, President, Federation of Indian Chambers of Commerce and Industry (FICCI), said, "This is a critical component for pushing the growth of the economy."

Pick-up in non-food credit was indeed an indicator of fresh investment that is on its way and the stable interest rate would help push the credit off take further, Mr Modi stated.

"But a 25-basis increase in the Repo rate is an indication of likely increase in the bank rate in near future. This should help industry prepare better for future," he said.

Increase in NRE deposits by 50 basis points will help attract more investments, he added. Mr Modi also welcomed the RBI's continued stance on pushing credit for agriculture and small-scale industry (SSI), which are the backbone of the economy.

Complimenting the RBI Governor for leaving the bank rate unchanged, Mr Sunil Kant Munjal, President, Confederation of Indian Industry (CII), said, "this will sustain the growth momentum in the industry." Further, the RBI Governor has indicated that the annual inflation rate is expected to be higher than the earlier forecast of 5 per cent.

"The revised estimate of around 6.5 per cent is not a serious concern as it is largely on account of external factors that may change in coming months," he said.

The Associated Chambers of Commerce and Industry of India President, Mr Mahendra K. Sanghi, said that the policy pronouncements are on expected lines.

The industry, however, was expecting an announcement for marginal decline in the interest rate, which has not happened. He welcomed the announcement for not touching the cash reserve ratio.

The PHDCCI President, Mr Ravi Wig, said that the overall stance of the policy to have appropriate liquidity to meet credit growth and support investment and export demand in the economy, while placing equal emphasis on price stability is indeed a step in the right direction.

However, Mr Wig pointed out RBI needs to continue to pursue its objective of reducing CRR to its statutory minimum of 3 per cent from the present limit of 5 per cent. The PHDCCI President appreciated the RBI's intention for migrating to Basel II norms. However, in view of the complexities involved, it should be ensured that migration should not have any adverse impact on cost and quality of funds to the industry, he said.

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