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Rediff.com  » Business » No change in interest rates makes industry happy

No change in interest rates makes industry happy

Source: PTI
July 31, 2007 17:52 IST
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Apex industry chambers on Tuesday welcomed RBI's decision not to raise interest rates but expressed concern over fall-out of the liquidity mopping measure of enhanced cash reserve ratio.

However, exporters expressed disappointment over the monetary policy not addressing their problems arising out of a sharp rise in Rupee value against major currencies.

"We have a word of caution about the tight monetary regime, as small and medium companies may find it difficult to access funds in such a monetary environment, since effective rates and availability of bank credit are an issue for them," Confederation of Indian Industry said in a statement.

But it said the policy was more or less on expected lines and the RBI not changing interest rates was a welcome move.

Ficci said the increase in CRR should have been kept on hold. "If a hike had become unavoidable, the banks should have been paid interest on the money parked with the RBI so that the pressure on them to increase interest rate is lower," Ficci president Habil Khorakiwala said.

The chamber wanted RBI to review the interest rates structure, to give boost to sectors like automobiles, white goods and real estate.

Assocham said the policy though balanced, excessively focuses on measures to tame inflation rather than fuel growth. "RBI should have reduced the interest rates as per industry expectations so that we could aim at achieving over 9 per cent GDP growth this year," Assocham President V N Dhoot said.

Echoing similar sentiments Phdcci said industry was expecting softening of interest rate structure, but hike in CRR by 50 basis point will lead to credit squeeze especially for micro, small and medium enterprises.

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