FIEO welcomes RBI’s decision to cut Repo Rate by 25 basis points for exports

FIEO welcomes RBI’s decision to cut Repo Rate by 25 basis points for exports

Agency News

Hyderabad, Feb 7 : Federation of Indian Export Organisations (FIEO) has termed, the Reserve Bank of India's decision to cut Repo rate by 25 basis points, as a welcome step for exports.

In a statement here on Thursday, FIEO President Ganesh Kumar Gupta said as lowering Repo rate, at a time when flow of credit to the MSME sector of exports is at its lowest, will help banks across the country to bring down their lending rate for the businesses giving boost both to manufacturing and exports.

FIEO has been continuously urging the RBI to seriously look into the issue and take the much needed step in such a globally challenging time, the FIEO President said.

Non-food credit ending December 2017 grew at 2 per cent and that at the end of December 2018 saw an upsurge of 6.2 per cent in growth, he reiterated that MSME sector recorded an upstick ending December 2018 to 1.9 per cent from a negative 1.7 per cent ending December 2017 but much of the growth in the sector was skewed towards large and medium MSMEs.

The credit to small and micro sector declined to -2.1 per cent ending March-December 2018 from a -0.4 per cent ending March-December 2017 indicating banks aversion to higher risk perception, Mr Gupta said.

He said that the priority sector saw an upsurge to 2.9 per cent during March–December 2018 vis-a-vis -0.5 per cent during the corresponding period in the previous year but the export credit which had improved to -3.8 per cent (in March –December 2017 of the fiscal) dropped to an alarming -34.7 per cent in the corresponding period in 2018.

In fact, there has been a steady decline since December 2016 from Rs 458 Billion to 425 billion in fiscal ending March 2017 and then to Rs 283 billion for fiscal ending March 2018 and then to a further Rs 185 billion ending December 2018 in absolute terms which is a cause for concern, he added. (UNI)