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Put up credit policy that can absorb global shocks: ASSOCHAM

In view of global turbulence and shaking of investor’s confidence in the Indian market, the ASSOCHAM has advocated for a forward looking monetary policy that can absorb and withstand implications of global slowdown.

In a note submitted to the RBI Governor, the Chamber President, Venugopal N. Dhoot has proposed that the RBI should increase surveillance of entire financial system so that a crisis situation does not arise. The Chamber Chief has further suggested that Indian companies should be permitted to hike their overseas investment limit by 250% from current level of 200% of their total networth.

Dhoot said that the capital inflows should be diverted towards the infrastructure investment as this would help in solving the problems of access liquidity on account of capital flows and help in removing the infrastructure constraints.

The current investment boom in Indian economy can be hampered because of high borrowing costs particularly for small and medium enterprises and therefore, interest cut has become absolutely essential to ensure that SMEs contribution is enhanced towards domestic production and equally to exports. This would be possible with extension of liquidity to these enterprises particularly at lower borrowing costs.

The Chamber has also recommended that RBI should consider increasing the overall ceiling from US$ 22 billion and raising the company wise ceiling of US$20mn towards the domestic use of funds raised through the external commercial borrowing routes. The tightening of end-use norms for using the funds raised through this route should also be eased.

Since, the domestic companies are doing reasonably well, Dhoot said that India Inc. should be permitted to hike their overseas investment by 250% of their total networth so that their capital realization is used for capacities expansion with stronger currencies, added Dhoot.

The Chamber has pointed out that adequate liquidity infusion at appropriate time during crisis in the financial markets is a key element to avoid the situation of major turbulences as witnessed in the stock market in the last few months

India is 2nd biggest wireless telecom market

India has become second largest wireless network in the world after China by overtaking USA, as per data available on CTIA (International Association for the Wireless Telecommunications Industry) website. The total wireless subscribers base stood at 261.09mn at the end of March. A total of 10.16mn wireless subscribers have been added in March as against 8.53mn wireless subscribers added in the month of February. A total of 10.4mn telephone connections were added during March compared to 8.49mn in February. Total number of telephone connections reached 300.51mn at the end of March as against 290.11mn in February. The overall tele-density is 26.22% at the end of March versus 25.31% in February. In the wireline segment, the subscriber base increased to 39.42mn in March as against 39.18mn in February. Total broadband subscribers base reached 3.90mn from 3.47mn in February.

Inflation spikes further

India's inflation, based on the Wholesale Price Index (WPI), rose further in the second week of April even as the Government reiterated its resolve to contain inflation by taking all the necessary steps. The annual inflation accelerated to 7.33% in the week ended April 12, from the previous week's gain of 7.14%, the Commerce & Industry Ministry said. Inflation was 6.34% during the corresponding week of the previous year.

The WPI for All Commodities rose by 0.1% to 226.9 from 226.6 in the week ended April 5. The index for Primary Articles advanced 0.5% to 237.1 while the index for Fuel & Power was up marginally at 342.1. The index for Manufactured Products was unchanged at 197.6 while the index for Minerals Group surged 5.8% to 630.2 due to higher prices of iron ore and other minerals.

Meanwhile, the Government revised inflation rate for the week ended Feb. 13 to 5.66% from a preliminary estimate of 4.89%. The WPI for the same period stood revised at 220.4 as against the earlier forecast of 218.8. The Centre also said that the annual average rate of inflation during the year ended March 2008 works out to 4.51% compared to 5.42% during the previous fiscal year.

The Government will take all steps to reverse the rising trend in inflation, Prime Minister Dr. Manmohan Singh told allies of the ruling Congress-led coalition at a meeting in New Delhi. The Prime Minister also said that the Government is confident of increasing procurement of foodgrains this year. He said that indications are of improved food production, which will further contribute to increased food procurement.

Separately, Finance Minister P. Chidambaram told the parliament that the Government will seek to maintain the country's strong economic growth momentum and will take more steps to curb inflation. The Finance Minister also expressed confidence that inflation will moderate over time as the impact of fiscal and monetary measures kick in.