India Inc says will ease fund crunch

India Inc, on Tuesday, said the Rs 32,000 crore additional liquidity in the system as a result of half a percentage point cut in cash reserve ratio will help in easing fund constraint being faced by the industry.

Stating it was a welcome measure, CII Director General Chandrajit Banerjee said it will help ease liquidity situation in the banking system which has remained tight since November 2011.

According to Asscoham Secretary General D S Rawat additional liquidity would help the sector to fund viable projects held up due to liquidity crunch. The focus (of RBI) is now shifting from controlling inflation to restoring growth momentum as liquidity in the system eases further.

Investment cycle
The shift in stance, industry associations believe, might reflect on the repo rates as well from here on, which would help in fueling the weakened investment cycle.

However, Ficci President R V Kanoria, said given the uncertain growth prognosis for current fiscal, a cut in repo rate may have acted as strong enabling factor in spurring investment activity.

Garment exporters, looking forward to reduction in interest rates, said RBI has failed to provide any relief and it difficult to compete with neighbouring countries where interest rates are lower.

Apparel Export Promotion Council said the policy has not addressed the issue of reduction in interest rate nor has the RBI has announced interest subvention for knitwear and garment exporters.

Credai President Lalit Jain said this move was long awaited and will immensely help the realty market, which right now is cash starved. However, it is also important that interest rates come down in the near future which will be a huge boost for home seekers to facilitate them in buying homes and invest in the real estate market.