Chairman AEPC Dr A Sakthivel, on behalf of the garment & textiles industry has expressed disappointment over the increasing the repo rate. In a statement made, Chairman Dr. Sakthivel stated that, “The availability of capital is central to the growth of the garment sector.
"Most of the exporters are SME and easy availability is a critical input that leads to the smooth functioning. It will also impact the growth export momentum and employment generation. Out input cost have been growing on account of the spiraling inflation and energy cost. “We were expecting that reduction in CRR that also did not happen”, he added.
It is noteworthy that the monetary and liquidity measures adopted by the RBI in its mid-quarter policy review as was unexpected nothing substantial has changed. On the basis of an assessment of the current and evolving macroeconomic situation, RBI decided to:
- Reduce the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 per cent with immediate effect;
- Reduce the minimum daily maintenance of the cash reserve ratio (CRR) from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning September 21, 2013, while keeping the CRR unchanged at 4.0 per cent; and
-Increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25 per cent to 7.5 per cent with immediate effect.
Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent and the Bank Rate stands reduced to 9.5 per cent with immediate effect. With these changes, the MSF rate and the Bank Rate are recalibrated to 200 basis points above the repo rate.
Dr Sakthivel has asked for the separate chapter for the exports in the banking sector at the fixed rate of 7.5%. I have written to Finance Minister on this, we have been doing well from the last six months and for sustaining the momentum of growth it is an essential need, Chairman demanded.