New Delhi: India Inc on Thursday cautiously
welcomed the RBI's move to modify the ECB guidelines and said
this also indicates a gradual withdrawal of stimulus measures
announced to help the industry tide over the global credit
crunch last year.
Industry body Ficci said that the Reserve Bank's step may
make availability of funds through external commercial
borrowing route more expensive.
"The ECB route is frequently used by SMEs for raising
funds, which are even otherwise available at a high price from
the domestic banking system," it said.
It also said that the relaxation of certain ECB norms
given by the RBI during the liquidity crisis period to India
Inc have been gradually withdrawn "which is an indicator of a
gradual withdrawal of the stimulus package."
Echoing the view, CII said that RBI's steps are an
indication of slowly unwinding of the liquidity enhancing
measures. However, it said, "These measures should not be seen
as a precursor to monetary tightening through a rate hike."
The chamber, however, welcomed the central bank's
decision to allow NBFCs exclusively involved in financing
infrastructure projects to avail of ECBs. "The inclusion of
telecom companies raising debt for 3G licenses ... in this
category is welcome."
RBI yesterday made it easy for telecom companies bidding
for third generation (3G) mobile spectrum to borrow money from
abroad, while tightening the norms for others.
Assocham said that the stimulus package has shown the
desired impact and needs to be continued including the easing
measures unveiled last year at the peak of global financial
crisis for foreign borrowings.
"The RBI with its reintroduction of price ceiling on
overseas borrowings is likely to give negative signals and may
be taken seriously by the market towards a major step to roll
over a part of the government initiatives," it said.
Industry body PHDCCI welcomes the RBI’s decision to allow
NBFCs involved in financing core sector projects to avail of
ECB under the approval route.
"Though RBI has moved towards restricting ECB for
businesses beyond specified projects, this should be extended
to some more sectors, including projects coming up in
infrastructure sector as investment in this sector is urgently
needed," PHDCCI President Satish Bagrodia said.
To tide over the global financial crisis, the government
has announced stimulus packages in December 2008 and January
2009.
The government cut excise duty by six percent and
service tax by 2 percent in phases, while stepping up plan
expenditure to prop up the economy, facing the impact of
global financial crisis.
PTI
First Published: Thursday, December 10, 2009, 17:39