Trade off between growth and inflation well balanced - FIEO

28 Oct '09

2 min read

Mr A Sakthivel, President, Federation of Indian Export Organisations (FIEO) while commenting on the Monetary Policy Review (2nd quarter) stated that the status quo in policy rates was as anticipated but for the restoration of the SLR by 1%. Any 'tinkering' in policy rates at this point in time may not have been helpful, held Mr Sakthivel, considering the fact that banks net margins are already under pressure due to successive lending cuts & high cost deposits which could create a liquidity crunch if credit growth picks up in the last 2 quarters as has been expected by experts.

FIEO Chief elaborated that the Asian currencies are strengthening in spite of countries selling their domestic currencies on concerns that export recoveries will slow down further, a 'wait and watch' situation till January when the next review is to take place has been an extremely prudent decision of the Reserve Bank.

As far as the MSME export sector is concerned,the transmission mechanism for the credit sector needs to be improved observed Mr Sakthivel and low cost rupee credit at comparable South Asian levels who are our competitors (5%) and dollar loans at LIBOR + 1% would be necessary to effectively cater to a recession hit low cost global market added FIEO Chief.

Federation of Indian Export Organisations (FIEO)

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