Focuses on continuity

Milind BarveMumbai: In the midyear review of the Credit Policy for the year 2003-04, Reserve Bank of India governor Dr Y V Reddy has focused on "continuity." With no cuts in the interest rate, though against market expectations, the review focuses on continuity and provides a stable and predictable policy environment. Furthermore, the bias towards "soft and flexible interest rates" will continue.

The review of the macroeconomic conditions is heartening with forecasts of the gross domestic product growth for 2003 being revised upwards to 6.5-7 per cent and the wholesale price index being revised downwards to 4-4.5 per cent. This will certainly strengthen the opinion of various market participants that the Indian economy is among the fastest growing in the world.

The permission granted to mutual funds to issues and redeem units in the Securities and Exchange Board of India-approved offshore funds and the remit dividends payable overseas will have a far-reaching impact on simplifying the launch and administration of such schemes.

(Barve is the managing director of HDFC Mutual Fund)