Welcoming the softening of interest rates and the cash reserve ratio (CRR) cut, the ICC president said the CRR cut will release around Rs 3,000 crore to an already liquid market, and therefore, it will be important to ensure enhanced credit off-take to the industry.

Lodha said the RBI's gross domestic proeduct (GDP) projections of 5-5.5 per cent are encouraging, particularly given the harsh drought conditions faced in the Indian economy a couple of months ago. ''With the emerging positive industrial outlook, and with the bulk of the government borrowing programme complete, the stage is set for a greater credit off-take by the industry, provided the banks shed some of the 'over-cautious' stance to ensure that adequate funds are available to fuel growth in the economy.''

Lodha expressed concern at the rising non-performing assets (NPAs) of banks and said despite a continuous softening of rates, interest rates are still to come down to levels at which the Indian economy will become more competitive.

The ICC chief complimented Jalan for an extremely prudent foreign management policy and said the increase in the foreign exchange reserves has been achieved without increasing the overall level of external debt. ''This is commendable since the increase was due to non-debt flows, including higher remittances and a quicker repatriation of export proceedings.''

Lodha, however, said there is an expectation that priority sector lending norms will be extended to sectors such as power, roads, ports, knowledge parks and food processing facilities to enhance growth in these immensely critical areas. ''Though the Credit Policy did not address this, the banking sector will need to examine whether increased levels of credit could be made available to these sectors to ensure a higher level of growth in the economy.''

The ICC chief also said the deregulation of the ceiling rate of the prime lending rate (PLR) plus 0.25-percentage point on the pre-shipment credit beyond 180 days and up to 270 days and post-shipment credit beyond 90 days and up to 180 days, with effect from May 2003, will enhance the flow of credit to the export sector.

The RBI's promise to discontinue with the ceiling rates on the pre-shipment credit up to 180 days and the post-shipment credit up to 90 days will encourage greater competition in the interest of exports, he added. ''Also the flexibility in the repayment of export credit will enhance the competitiveness of the exporters.''