Reserve Bank of India released second Quarter Review of Monetary Policy 2012-13 and leaves Repo Rate and Reverse Repo Rate unchanged at 8% and 7% respectively while reducing the Cash Reserve Ratio (CRR) by 25 basis points with an intension to maintain the interest rate to contain inflation and anchor inflation expectations.
While giving reaction to this policy review, Dr. A. Sakthivel, President, Tirupur Exporters’ Association (TEA) said the garment exporting sector was expecting for reduction in interest rate after the measures taken by the Government of India and added the RBI’s continuous stance on interest rate will trigger for losing of competitiveness of export sector in the global market when our competing countries are maintaining interest rate comparatively lower than us.
RBI in its over view on macro economic and monitory developments second quarter review 2012-13 released yesterday has stated that major exporting sectors including textiles and textile products have been significantly affected due to week external demand and also noted the median lending rate ranges from 10.5% to 15.38% for domestic banks.
Against this background, Dr. A. Sakthivel pointed out that with this level of higher cost of fund, the cost of production has proportionately increased and it is the cause for concern for the exporting sector.
Dr .A. Sakthivel was apprehensive and stated that it looks challenging for the garment sector achieving the export target of US$ 18 Billion during 2012-13.
Dr. A. Sakthivel appealed to RBI to come out with a special chapter for export sector to keep the reduced interest rates, as like agriculture sector.
