Transmission of previous policy cut yet to be implemented in full measure
Author(s): City Air NewsExport credit to be monitored with re-introduction of subvention recently Ludhiana, December 1, 2015: Mr S C Ralhan, President, Federation of Indian Export Organisations (FIEO) while commenting on the status quo...
cityairnews
Dec 1, 2015 12:30
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Export credit to be monitored with re-introduction of subvention recently
Ludhiana, December 1, 2015: Mr S C Ralhan, President, Federation of Indian Export Organisations (FIEO) while commenting on the status quo on policy rates stated that in the last policy announcement of 29th September repo rates were reduced by 50 basis points but the same does not seem to have been transmitted in full measure by all the banks and as a result there is a fall in non-food credit off-take from 8.3% to 3.4% ending 30th October 2015.
A measure of investment in the economy- Gross fixed capital formation [GFCF] has reduced to 30.1% of GDP as against 30.3% of GDP in the previous year Q2 data although it has shown a marginal pick-up from first quarter this year, not to mention that from the corresponding period last year GDP(8.4%) level has fallen by one percentage point.
FIEO chief stated that while MSME credit off-take has shown a decline of -2.6% as compared to 1.3% in the corresponding period last year, there is a marginal uptick in priority sector due to state sponsored institutions and educational loans.
President, FIEO hoped that with the re-introduction of interest subvention there would be an uptick in credit-offtake which needs to be monitored given the declining exports and a study be initiated on whether the cost of funds for industry are in line with return on investments and other economic parameters to assess the inertia that seems to impact investments as ECB and low cost foreign currency loans can adversely impact company balance sheets in case domestic currency shows volatility/weakens.
Date:
Tuesday, December 1, 2015
