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Softer rates will give harder push to economy: India Inc

E-Tex Staff - Mumbai

The monetary and credit policy for 2003-04 by the RBI has reiterated the government’s commitment to a soft and stable interest rate regime, feel Indian corporates. The cut in bank rate from 6.5 per cent to 6 per cent and reduction in cash reserve ratio by 0.25 per cent has been hailed as a step in the right direction. Chairman RPG Enterprise, Mr Harsh Goenka said that the policy is firmly based on ground realities. The cut in bank rate and the reduction in CRR will strengthen industrial recovery if there is corresponding response from commercial banks. He added that the cut in interest rates and the reduction in the CRR in the past two years have had a salutary effect on economic performance leading to higher investment in housing industry, greater industrial output and higher exports. Though there has been a temporary rise in inflation, following the drop in world oil prices last fortnight, this should subside. He added that it is extremely important that the signals given by RBI are reflected in the market.

Nicholas Pirmal India chairman, Mr Ajay Piramal said that the RBI has sent out clear signals to dispel the apprehension in the minds of many as to whether the softer interest regime is here to stay by reducing the bank rate and the CRR by 25 basis points. The measure proposed to enhance transparency in fixing the prime lending rates by suggesting banks to disclose the benchmark PLR is very much appreciated.