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Credit policy will ensure growth in manufacturing: FICCI

Written by: Staff

New Delhi, Apr 18 (UNI) Welcoming the Reserve Bank of India's (RBIs) decision to maintain stability in interest rates, the Federation of Indian Chambers of Commerce and Industry (FICCI) today said the move will ensure growth in the manufacturing sector.

''This would ensure momentum of growth, particularly in manufacturing,'' FICCI President Saroj K Poddar said in a statement.

However, the RBI has displayed its concern by raising the risk weightage of real estate and personal loans and also by tightening the exposure of banks to capital markets. It is through these measures that the RBI aims to decelerate non-food credit growth to 20 per cent.

The regulator has clearly shown its preference towards ensuring flow of credit to agriculture and manufacturing while seeking to improve credit quality by reigning the flow of funds to real estate, personal loans and capital market segments.

By increasing the ceiling on interest rates on non-resident (External) rupee deposits, RBI aims at mopping up more dollar inflows from NRIs to sustain liquidity flows into the economy.

The move to tap NRI deposits is also aimed at strengthening the foreign account against further increases in global oil prices.

Mr Poddar added that RBI's confidence in our economy is evident from its forecast of 8 per cent GDP growth for 2006-07.

Though concerns have been expressed on Money Supply expansion, new measures announced in the Credit Policy show RBI's preparedness towards tackling any disturbance, both internal and external and the maturity of our regulator, Mr Poddar said.


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