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Jun 17, 2013, 04.30 PM IST | Source: CNBC-TV18

Subbarao has hit the nail on its head, says Ambit's Wadhwa

In an interview to CNBC-TV18, Ashok Wadhwa, Group CEO of Ambit Holdings spoke about his reading of the latest RBI credit policy and the road ahead for the Indain economy.

In an interview to CNBC-TV18, Ashok Wadhwa, Group CEO of Ambit Holdings spoke about his reading of the latest RBI credit policy and the road ahead for the Indain economy.

Below is an edited transcript of the interview on CNBC-TV18.

Q: The Reserve Bank has not cut rates and says the very laggardly manufacturing growth can be encouraged only by faster clearances and the government investing. What is your sense; if rate cuts don’t come, will it stymie growth?

A: I personally believe that the governor has hit the nail on the head. We have had a rate cut in the past and it is not as if that rate cut has translated into a significantly larger amount of investment, particularly in the infrastructure and the capital goods sector. We have seen that lack of government decision-making and clarity on what it needs to do on critical elements related to infrastructure are all serious roadblocks at this point in time.

It is not as if more money being available to industry is going to be the sole determinant of higher amount of investment. By making it as specific, the governor has thrown the ball where it belongs and said to the government, "Listen! My ability to reduce rates to some extent is dependent upon your decision-making and honestly even if I was to go and reduce the rates, without decision-making at your end, it is not as if it will translate into any additional investment".

He (RBI governor) has been both prudent and sensible in making that point. We heard the finance minister talk about how the government is evaluating several actions and he hopes to implement and provides clarity on such investment opportunities, whether it relates to foreign direct investment (FDI) or relates to an infrastructure industry. Should some of these happen, over the next few days, clearly July 30 will be a positive outcome. If we see the government dragging its feet, the way it has, the governor has already made his point that do not expect any more rate cuts.

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