Likely growth scenario is 7.5-8%: Franklin Templeton

A:  From a monetary policy perspective, I think an interest rate hike and a CRR hike cannot be ruled out, when that will happen is hard to say. As far as fiscal measures are concerned, some have been taken and some more may need to be taken.

Regarding bank stocks, there are three or four issues as far as banks go. Firstly there is the high interest rate scenario. Secondly growth is slowing and advance growth has been muted this year. Thirdly we have this unknown forex derivative losses and how that will impact banks. And fourthly consumer credit issues are also there. Consumer credit growth has been slow but consumer credit quality itself is also an issue. So I think overall banks are going through a difficult time and we’ll have to see our place out.

Q: Give us an idea of what your expectation is of growth from India Inc in this new scenario?

A: I think 7.5-8% is the likely scenario for growth given what’s happening.

Q: Would you have to change your earnings forecast in the light of these higher inflation numbers and possible policy action?

A: I think we’ll have to moderate a little more, I had earlier said 15-20% is what we should expect, which was itself a moderation from the earlier growth rate. Looking at what’s happening, I would tend to be little more cautious and I would say it will be closer to around 15%.