some of the reactions of the Monetary and Credit Policy
2003-04 announced yesterday.
India's economic fundamentals are good as shown in the
credit policy announced by the central bank, and the bank's
growth outlook is realistic. We welcome the credit policy.
It is very, very good. It shows the resilience of the
Indian economy and also that the macro fundamentals are
good. The possibilities for growth in this year are quite
good, the Reserve Bank of India's (RBI) gross domestic
product (GDP) and inflation outlook were realistic and
we hope the country would achieve 6-6.5 GDP growth in
2003-04 due to expectations of a better monsoon.
S Narayan, finance secretary, ministry of
finance, Government of India
Expect trickle-down effect
The interest rate measures announced by the RBI in the
credit policy establishes a medium-term direction for
the interest rates. The 0.25 per cent CRR cut should be
viewed in light of the long term objective of 3.0 per
cent while the 0.25 per cent cut in bank rate points towards
the current interest rate scenario being sustainable over
the medium term. Going forward we should see a trickle-down
effect with lower lending rates across the banking sector
with a high chance of a lagged impact on the deposit rates
Milind Barve, managing director, HDFC Mutual
The bank rate cut at 0.25 per cent was lower than market
expectation of 0.50 per cent. Post-policy, we have seen
a 10-year bench mark gilt move up by 6 basis points to
5.94 per cent. Over the next few days we could see the
benchmark paper hover around 5.95 per cent to 6.05 per
cent. The immediate direction will be decided by inflation
numbers and the first state government-borrowing programme
to restructure old high-cost debt that may be announced
by the RBI. Inflation numbers have been high in the recent
past on account of high oil prices and truckers' strike.
Oil prices have started easing and with truckers' strike
over, we expect inflation numbers to be lower, thus going
Nandkumar Surti, head fixed income, JM Mutual
Will boost economy
The credit policy will boost economy, improve liquidity
and give a fillip to credit off-take. Dr Bimal Jalan,
the RBI's suave governor, has carried forward his earlier
vision and taken steps to solidify the Indian economy.
We feel that investment in mutual funds still make sense,
and investors can look at debt funds with a longer duration.
Also the RBI governor stated that the softer bias towards
interest rates would continue going forward and the RBI
would provide adequate liquidity to meet credit growth
and support investment demand. We, therefore, feel the
chances of interest rates rising significantly are low.
Pankaj Razdan, deputy chief executive officer,
Prudential ICICI AMC
We expect the debt market to be range-bound and the soft
bias to continue (10 year G-Sec is likely to move in the
range of 5.75-6.25 per cent). The prices could fall marginally
from current levels, but investors should look at the
time horizon for investment while entering the market
rather than levels. While a significant one-way decline
in interest rates is not likely, the market will still
give opportunities to the patient investor.
Dileep Madgavkar, chief investment officer,
Prudential ICICI AMC