Industry chambers welcome credit policy
| The industry associations also praised the central bank for setting the inflation target at 4-5 per cent and the gross domestic product (GDP) growth projection at 8.5 per cent. |
| ASSOCHAM Associated Chambers of Commerce and Industry of India (ASSOCHAM) has appreciated RBI's decision to allow the pre-payment of ECBs without prior RBI approval within a limit of $400 million, increase the capital account transactions from $50,000 to $1,00,000 a financial year and set up a working group to tackle issues related to interest rates, derivatives and facilitate the development of interest rate futures markets. |
| The industry lobby welcomed the realistic GDP target of 8.5 per cent for 2007-08. The emphasis on price stability and containing the rate of inflation at 5 per cent in the current financial year, is welcome as well. However the recent increase in the bank rate, reverse repo rate and repo rate are problematic, according to the chamber. |
| FICCI Apart from applauding the RBI for seeking to control the inflation rate at 5 per cent, enhancing the overseas investment limit for Indian companies from 200 to 300 per cent of their net worth and limiting the prepayment for ECBs, the Federation of Indian Chambers of Commerce and Industry (FICCI), has stated that the policy is in line with the recommendations of the Tarapore Committee on Capital Account Convertibility (CAC) and Percy Committee on IFC and clearly shows RBI's willingness to move towards the CAC in a calibrated manner. |
| "RBI has finally taken cognisance of the needs of the middle class willing to buy their own homes, by marginally reducing the risk weightage on loans up to Rs 20 lakh", said Habil Khorakiwala, President, FICCI. |
| PHDCCI The PHD Chamber of Commerce (PHDCCI) welcomed RBI's decision to keep the bank rate, reverse repo rate, repo rate and CRR unchanged. "Once the inflation rate is within manageable limits, RBI should take measures to soften the interest rate structure in the country", said Sanjay Bhatia, President, PHDCCI. |
| The industry chamber welcomed the overall instance of the monetary policy to maintain appropriate liquidity in the system to meet the legitimate credit requirements, consistent with price and financial stability. |
| The reduction in the risk rate on residential housing loans to individuals for loans upto Rs 20 lakhs and the increase in the benchmark prime lending rates by 2-2.5 per cent are applaudable decisions. |
| Measures such as flexibility on the pre-payment of ECBs, enhancing the current or capital transaction limit for individuals by $50,000 and increasing the limit of overseas investments by mutual funds are steps in the right direction to achieve the goal of full capital account convertibility, stated the chamber. |
| CII The CII has welcomed the central bank's GDP growth target of 8.5 per cent for 2007-08. The increase in the target money supply to 17-17.5 per cent is welcome, said Seshasayee. |
| However, CII has expressed concerns about the compatibility of 4-5 per cent inflation with high growth rate over the medium term, which India needs to aspire for. |
| "We need to move to a system by which a more disaggregated approach is adopted for inflation monitoring and management", said the CII President. |
| IACC The Indo-American Chamber of Commerce welcomed the annual policy statement saying "the steps contemplated in the policy will adequately address the inflationary pressures without adversely affecting growth impulses on the one hand and hardening of the rupee on the other". |
| The unchanged repo rate, reverse repo rate and the bank rate is a great relief to industry. IACC believes that the RBI has rightly reduced the money supply to a manageable level of over 17 per cent, which is critical for abating inflation. |
| FIEO Federation of Indian Export Organisations (FIEO) president G K Gupta said measures such as enhancing the overseas limit to 30 per cent of net worth and increasing the current or capital account transactions to $1,00,000 from $50,000 were commendable. However, FIEO is upset over the lack of initiatives to counter rupee appreciation. |