Unhappy over the Reserve bank of India's (RBI) more-than-expected 75-basis point hike in cash reserve ratio (CRR) to squeeze money supply, India Inc today cautioned that economic growth will be hit if accommodative monetary stance is reversed hastily.
A Ficci statement said that small and medium entreprises (SMEs) are still borrowing at around 13 per cent, exports have contracted by nearly 20 per cent during October 2008 and October 2009 and imports are down by 21 per cent during the same period. "Therefore...It is still premature to signal a tightening of the monetary policy and has cautioned that if this is complemented with fiscal tightening, the results would be disastrous," it said.
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