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The fourth Forum of Emerging Markets witnessed the meeting of major influencers as well as the decision makers. They had a discussion on the pros and cons of Indian Economy. It was a platform for exchange of views; with some of them raising their concerns and the rest by being optimistic.
Deepak Parekh, the chairman of the HDFC Bank displayed the positive side by showing faith on the banking system of India. The commercial banks were trying to channelize the huge funds with the Reserve Bank of India (RBI). He reiterated that the credit demand is failing to grow in tandem with liquidity. Due to this, the loan rates are expected to slip further. According to Parekh, the rates are estimated to decrease over the coming six months by at least 50 basis points.
Parekh went on to speak about the housing industry that the demand for housing at an affordable rate (up to Rs 30 lakh per unit) is constantly on the upsurge throughout the country. This condition arose due to a lot of changes in the prices of the property in the recent past. According to an optimistic Parekh, the present financial year is witnessing an improvement (on monthly basis) in this sector with the help of HDFC's loan disbursements.
Montek Singh Ahluwalia, the deputy chairman of the Planning Commission, also emphasized the kickstart of the Indian economy in the third quarter of the current year. Participants from over the world instantly supported Ahluwalia.
The four days of the meeting (one in New Delhi and three in Mumbai) would also be attended by Bimal Jalan, the former RBI governor and member of Rajya Sabha. Set to be one amongst the panel members, he expressed his concern over the wide difference between the repo rates and the actual lending rates. This should be closely examined by RBI, he said.
The bank's lending rate is at 11% while the present repo rate amounts to about 5.5%. He insisted that it amounted to a vast spread of about 600 basis points. According to a banker, the government's way of approach to solve the fiscal deficit and to come out of the serious issue remains to be seen.
Former Sebi executive director as well as a senior official of the World Bank, Pratip Kar stated that a huge amount of foreign investments might be on the cards; since the reforms formulated by the government are very well communicated to them through this forum.
Zia Mody, a senior partner with the leading law firm AZB & Patrners; emphasized the move by the government of India had been a worthy initiative by successive exchange of ideas. The Financial Express
June 24, 2009
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