Industry needs credit to boost growth: Anand SharmaMay 3rd, 2011 - 8:03 pm ICT by ANI
New Delhi, May 3 (ANI): Echoing the opinion of several industry experts on the hike in interest rates by the Reserve Bank of India (RBI) on Tuesday, Commerce Minister Anand Sharma said adequate credit must be made available for the industries to boost growth.
Addressing mediapersons here, Sharma urged the RBI and the Finance Minister to ensure free flow of credit for industrial growth.
“Our views are on record that credit should be on easy terms. It must be made available to the industry so they can add capacities and add to production. We will continue conveying this both to the Finance Minister and the RBI. We have been assured that adequate credit is available on easy terms to the Indian industry,” said Sharma.
However, industry experts remained sceptical of the RBI measures, saying the rate hike would bring down the economic growth rate.
“The steps which the RBI took, they have failed to rein in inflation. So the question is whether it is only due to demand driven or due to supply constraints. Second thing is these rate hikes will certainly bring down the GDP growth rate and now, nobody is expecting 8.5 percent plus GDP growth rate. So, it is a serious thing,” said Sunil Shah, a market analyst in Mumbai.
The Reserve Bank of India (RBI) earlier today raised repo and reverse repo rates by 50 basis points each for the current fiscal.
The RBI has also increased the saving bank rate by 50 basis points to four per cent to give higher returns to depositors in the wake of high inflation.
While the repo rate has been raised from 6.75 per cent to 7.25 per cent, the reverse repo rate has been raised to 6.25 per cent. However, the RBI has kept the Cash Reserve Ratio (CRR) unchanged at six per cent. Savings bank deposit interest rate was increased from 3.5 per cent to four per cent.
Under a new arrangement, the repo rate becomes the central bank’s only independently varying policy rate, and the reverse repo rate, at which the RBI absorbs excess liquidity, will be pegged 100 basis points below the repo rate.
The RBI said high prices of oil and other commodities and the cumulative impact of its policy measures will lead to moderating growth of about eight percent for the current fiscal year. (ANI)
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