He elaborated that for exports, higher interest rates and their differentials (mean more arbitrage opportunities and more FDI which may result in rupee appreciation) both hit at export competitivene
Ramu S. Deora, President, Federation of Indian Export Organisations (FIEO), has urged the Government to maintain distinction between exports and domestic finance and provide export credit to small and medium enterprise (SME) sector at 7 percent and others at 9 percent and immediately introduce interest subvention from April 1.
While commenting on the Monetary Policy Review FIEO Chief Thursday stated that the increase by 25 basis points has confirmed the worst fears of the export sector.
He elaborated that for exports, higher interest rates and their differentials (mean more arbitrage opportunities and more FDI which may result in rupee appreciation) both hit at export competitiveness.
In the last 15 months, the key policy rates have increased 10 times from 3.25 percent to 7.50 percent and have impacted the growth momentum while making some leeway in the wholesale price inflation which has fallen to 9.06 percent in May from 9.68 percent a month ago. However, the flip side has been a moderation in the economic parameters such as IIP falling to 4.4 percent in April (against 8.8 percent in March) and Fourth Quarter GDP falling to 7.8 percent as against 8.3 percent recorded in the 3rd Quarter.
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