Credit offtake by India Inc excellent: Kamath

July 14th, 2008 - 9:42 pm ICT by IANS  

Bangalore, July 14 (IANS) Credit offtake by India Inc during the first quarter (April-June) of this fiscal has been excellent though consumer credit has slowed down, said Confederation of Indian Industry (CII) president K.V. Kamath here Monday. “Credit offtake by Indian Inc has been excellent so far. I think corporate India is a pipeline of $700-750 billion, which is being funded either through cash accruals, bank credit or external commercial borrowings. I see no slowdown in credit offtake by corporate India. Consumer credit has already slackened,” Kamath, who is also the CEO of ICICI Bank, told reporters on the sidelines of a CII meeting.

On the corporate performance in the first quarter of this fiscal, Kamath said while it was “satisfactory” on the whole, some sectors did face growth challenge.

“We have to see what happens in this (quarter) and next quarter. We will take a call after assessing the performance by the end of the two quarters,” Kamath noted.

Admitting that liquidity situation was comfortable till recently, Kamath said successive hikes in CRR (cash reserve ratio) by the Reserve Bank of India (RBI) had the desired impact, as the objective was to contain headline inflation even at the cost of growth.

“Our challenges are rising inflation and soaring commodity prices. What is insulating us is the huge pipeline of investment in core sectors. Though 60 percent of the Indian economy is from the services sector, we are yet to see this sort of challenge from the manufacturing sector. The banking side is also facing challenges but is not impacting the overall growth rate,” Kamath pointed out.

On the interest rate, he said whatever has to be done, had already been done. He declined to speculate whether the rates would remain high or decrease in the near future.

“Let us see what policy framework will be in place and what action RBI will take when it meets (July 29) for the busy season credit policy,” Kamath said.

Citing high crude oil prices as the single factor contributing to double-digit inflation, he said high rate of inflation would continue to be a challenge as long as oil prices remained high.

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