Credit policy in-line with expectations - Mr. Pradeep Jain - Chairman, Parsvnath Developers Limited

"The policy is in-line with expectations viz. REPO RATE HIKE 25BPS, however, increase in REVERSE REPO by 50BPS is to rein in a rising inflation rate which has not come down as much as expected and demand pressure. I believe that the monetary actions are expected to moderate inflation by reining in demand pressures and inflationary expectations, maintain financial conditions conducive to sustaining growth, generate liquidity conditions consistent with more effective transmission of policy actions and reduce the volatility of short-term rates in a narrower corridor.

While the measures taken by RBI in past are clearly showing its benefits. First, domestic economic recovery is firmly in place and is strengthening. The 7.4 per cent growth in 2009-10 despite weak global growth and the insignificant contribution of the agriculture sector is a testimony of the resilience of the Indian economy. The Reserve Bank's upward revision of the GDP growth projection for 2010-11 to 8.5 per cent (from 8.0 per cent with an upside bias in April 2010) indicates that the economy is steadily reverting to its pre-crisis growth trajectory. I believe that in longer run, the policy measures are in the right direction but their success depends on how banks adjust sector-specific lending rates".

Source : Equity Bulls

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