Pleasing In General

Ashwin Dani

V-C & Managing Director

Asian Paints (India) Ltd

On the whole it has been a satisfactory policy, not only in terms of the contents but also in terms of the 'directions' provided to the various participants in the financial markets.

The bank rate, cash reserve ratio and repo rate have been cut by 25 basis points each. This move is likely to be welcomed by the industry, though the popular expectation was a cut by 50 basis points.

However, the lending rate of banks along with the spreads remain relatively at high levels. As pointed out by the governor, it is mainly due to the structural reasons (existing fixed rate deposits, non-performing asset levels, operating expenses, savings rates and government borrowings).

 

The medium and small-scale enterprises which bear the brunt of such interest rates would have appreciated some positive intervention in this regard.

The Reserve Bank of India governor is expecting a gross domestic product growth of 5-5.5 per cent, in spite of the expected decline in agriculture. This is driven mainly due to the pick-up in the industrial sector and robust exports (a 13.4 per cent growth). The non-food credit has increased by 7.4 per cent as compared with 5.2 per cent.

Inflation is expected to be in the region of 4 per cent for the year.