Jul 22, 2013
MUMBAI: Experts have recommended curbs on imports of imports and pro-growth policies to encourage inflows from foreign institutional investors. Reserve Bank of India's moves to raise rates has been criticized as it hurts growth and encourages foreign debt which is seen as hot money.
"There is a need for RBI to cut rates aggressively to bring back the 'feel better' factor as a 'feel good' factor is something that will take longer. There is a need for this to encourage inflows from foreign institutional investors which is the only source through which capital can come in fast and in large quantities" said Pradip P Shah, Chairman, IndAsia Fund Advisors. He was speaking at a seminar on the falling rupee and its impact on the Indian economy.
He also said that foreign currency non-resident deposits ( FCNR) which has helped India raise foreign currency in the past can be encouraged through sops such as lower cash reserve ratio and statutory liquidity ratio requirement for these deposits. He said that central government must do its bit by discouraging imports of consumer electronics, micro electronics and consumer products if required through non-tariff barriers. "Right now these imports are not doing anything for the Indian economy they are only creating jobs in Thailand or some other country" he said.
Echohing his view Saugata Bhattacharya economist Axis Bank said that the government's top priority should be in reviving growth. "Growth coming down from 9% to 7% is not as bad as growth coming down from 6% to 5%" he said. According to Bhattacharya besides placing curbs on imports the government could provide a simultaneous sop to domestic production through tax cuts.
According to Prabodh Thakker, Vice President, IMC and chairman of Aon Global Insurance Brokers to support the rupee there was a need to provide a boost to domestic manufacturing, improve the policy environment and spur growth.
Source:-timesofindia.indiatimes.com
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