Shashi Ruia : Policy Implementation A Far Cry

Shashi Ruia

Chairman

Essar Group

Influenced by the favourable inflation scenario, the emphasis of the mid-term review of monetary and credit policy was on reduction in the real interest rates.

Expansion of lendable resources of the banks, coupled with significant decline in cost of funds and consequent interest rate reduction, seems to be the underlying theme of this policy.

The Reserve Bank of India (RBI) has done everything in this policy to retrieve the economy from the slow growth.

Rates on export credit were left untouched giving a mild disappointment to the exporters. However, the stable exchange rates and absence of price pressures would compensate the exporters to remain competitive.

By continuing the soft interest-rate regime, the policy decisively addressed the key concern of the corporate sector.

However good the policy is, the implementation of the same is a far cry. The basic constraints in bank and institutional lending have not been addressed.