No need for monetary tightening now
The Hindu Business Line, January 19, 2010, Page 15
Arun S, Lagos
The Commerce and Industry Minister, Mr Anand Sharma, has called for easier availability of credit at low interest rates till the industry completely recovers from the aftermath of the financial crisis. The Minister's statement against any tightening of monetary measures comes days before the Reserve Bank of India (RBI) is slated to announce the third quarter review of its monetary and credit policy on January 29.
“I don't think there is any need for monetary tightening now,” Mr Sharma told reporters on the sidelines of the recently held Ficci event Namaskar Africa here.
Pointing out that the industry was yet to recover fully from the effects of the credit squeeze and freeze following the collapse of some big financial institutions in the West, the Minister said, “If you want the industry to expand and exports to be competitive then they must get credit on easy terms and low interest rates.”
“The dollar credit window we have created in the Foreign Trade Policy (FTP) for exporters should continue,” he added.
Announcing several incentives for exporters on January 12, Mr Sharma had said the Commerce Ministry has taken up with the Finance Ministry issues such as continuation of interest subsidies, cheaper dollar credit and more time for exporters to realise overdue export proceeds.
However, the Minister said he would not want to delve into the domain of the RBI. “Let them (RBI) regulate. I am only talking of the availability of credit on easy terms,” he said.
Asked whether the easy availability of cheap credit would further push up inflation, the Minister shot back saying, “There is no spill-over effect of credit on inflation. What should businesses do, should they shut down or stop expanding?”
He said the increase in food inflation had nothing to do with banks offering credit to business.
“I think there is a speculative build-up when it comes to food inflation in some of the commodities,” he said, adding that food inflation was resulting mainly from shortage of sugar, edible oil and pulses.
“There is enough grain available in the country. Both rice and wheat procurement is good. But I am worried about pulses and edible oils. The agriculture sector is also concerned. The Cabinet Committee on food security is taking a fortnightly stock of the situation. I am a member of that. We hope the food prices come down. We are also optimistic about the rabi crop,” he said. Food inflation was 17.28 per cent for the week ended January 2, down from 18.22 per cent in the previous week.
The Hindu Business Line, January 19, 2010, Page 15
Arun S, Lagos
The Commerce and Industry Minister, Mr Anand Sharma, has called for easier availability of credit at low interest rates till the industry completely recovers from the aftermath of the financial crisis. The Minister's statement against any tightening of monetary measures comes days before the Reserve Bank of India (RBI) is slated to announce the third quarter review of its monetary and credit policy on January 29.
“I don't think there is any need for monetary tightening now,” Mr Sharma told reporters on the sidelines of the recently held Ficci event Namaskar Africa here.
Pointing out that the industry was yet to recover fully from the effects of the credit squeeze and freeze following the collapse of some big financial institutions in the West, the Minister said, “If you want the industry to expand and exports to be competitive then they must get credit on easy terms and low interest rates.”
“The dollar credit window we have created in the Foreign Trade Policy (FTP) for exporters should continue,” he added.
Announcing several incentives for exporters on January 12, Mr Sharma had said the Commerce Ministry has taken up with the Finance Ministry issues such as continuation of interest subsidies, cheaper dollar credit and more time for exporters to realise overdue export proceeds.
However, the Minister said he would not want to delve into the domain of the RBI. “Let them (RBI) regulate. I am only talking of the availability of credit on easy terms,” he said.
Asked whether the easy availability of cheap credit would further push up inflation, the Minister shot back saying, “There is no spill-over effect of credit on inflation. What should businesses do, should they shut down or stop expanding?”
He said the increase in food inflation had nothing to do with banks offering credit to business.
“I think there is a speculative build-up when it comes to food inflation in some of the commodities,” he said, adding that food inflation was resulting mainly from shortage of sugar, edible oil and pulses.
“There is enough grain available in the country. Both rice and wheat procurement is good. But I am worried about pulses and edible oils. The agriculture sector is also concerned. The Cabinet Committee on food security is taking a fortnightly stock of the situation. I am a member of that. We hope the food prices come down. We are also optimistic about the rabi crop,” he said. Food inflation was 17.28 per cent for the week ended January 2, down from 18.22 per cent in the previous week.
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