core sector communique

Merchants' Chamber of Commerce

Press Communique                 Shri S.S.Beriwala, President, Merchants’ Chamber of Commerce has welcomed the moderate hike by 25 basis point each in Repo Rate, Reverse Repo rate and C.R.R. as well as shift in priority to controlling inflation from accelerating growth. The hike in C.R.R. is expected to absorb Rs. 12,500 crore liquidity from the Banking System which is not going to impact adversely in the short run.                   He, however, has expressed his doubt about containing inflation at 5.5p.c. and felt that capacity constraints in the Indian economy are most likely to put additional pressures on prices, unless immediate corrective steps are taken. Further, huge borrowing to the tune of Rs. 4.57 lac crore by the Government is likely to pose a bigger challenge to the Apex Bank in the current fiscal which may crowd-out private investment.                 Shri Beriwala feels that although the export sector shows some positive growth, Government should continue its support with incentives to accelerate domestic production as the hike in the key policy rates is likely to induce more funds inflow which in turn, would lead to appreciation of the rupee and adversely impact the exporters.