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MUMBAI: Mr Milind Barve, MD, HDFC Mutual Fund, said: "No cuts in interest rate underline the focus on continuity and provide a stable and predictable policy environment. It points towards a bias towards a soft and flexible interest rates going forward."

He added that the review of the macro-economic conditions was heartening with forecasts of GDP growth for 2003 being revised upwards to 6.5-7 per cent and WPI being revised downwards to 4-4.5 per cent. This, he said, would strengthen the opinions of various market participants that the Indian economy is among the fastest growing in the world.

Ms Kavita Hurry, CEO, ING Vysya Mutual Fund, said that key reference rates such as the bank and repo rates and CRR had been left unchanged. "To that extent, the review has disappointed the bond market, which had built up expectations of cuts in at least two of these three variables. While the RBI has indicated that the CRR cut may happen in the future, in line with its target of reducing it to three per cent, this would depend on the liquidity situation... ."

Mr Ian Gomes, Country Manager, KPMG, said: "Overall the central bank has continued in a cautious manner the policies established in recent times. The approach of the policy has been on the price stability and continuous and careful monitoring of investment climate. The Bank rate and CRR remain unchanged, contrary to market expectations of further softening of interest rates. This may affect the sentiment in the debt markets, given that the market participants had discounted the rate cut. The policy has relaxed guidelines permitting the sale of Government securities, which have been contracted for purchase. This is expected to have the effect of further enhancing liquidity in the debt markets. ."

The credit policy, Mr Kapil Wadhawan, Managing Director, DHFL, said, gave an over-all feel good factor with upward revision of expected GDP growth and manageable inflation. "The Policy is particularly positive with its advice to banks to enhance the credit flows to the SMEs, infrastructure and micro-finance on the basis of commercial viability. This focus may enhance the banks' approach to lending to the corporate sector. The growth in infrastructure can be expected to provide further impetus to the growth in the housing sector."

For Mr Naval Bir Kumar, Managing Director, Standard Chartered Mutual Fund, the RBI had painted an optimistic picture of the economic situation, combining expectations of higher growth with lower inflation.

Article E-Mail :: Comment :: Syndication

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