SME Times News Bureau | 02 Dec, 2015
Exporters body Federation of Indian Export Organisations
(FIEO) said that the transmission of prev. policy cut yet to be implemented in
full measure and export credit to be monitored with re-introduction of
subvention recently.
While commenting on the status quo on policy rates, President, Federation of
Indian Export Organisations (FIEO), S C Ralhan 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
percent to 3.4 percent ending 30th October 2015.
A measure of investment in the economy- Gross fixed capital formation (GFCF)
has reduced to 30.1 percent of GDP as against 30.3 percent 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 percent) level has fallen by one percentage point.
FIEO chief stated that while MSME credit off-take has shown a decline of -2.6
percent as compared to 1.3 percent in the corresponding period last year, there
is a marginal uptick in priority sector due to state sponsored institutions and
educational loans.
He 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.