|
What are your expectations from the mid-quarter policy review to beheld on June 18? Global uncertainty and staggering domestic growth have given riseto expectation of rate cut, but at the same time, you have concernsof heavy government bond supply and inflation. After looking at theGDP (gross domestic product) data announced recently forJanuary-March 2012 quarter, we are expecting a rate cut of 25-50bps in the mid-quarter policy review. There could be a cut in thecash reserve ratio if liquidity continues to remain tight. Going forward, how do you think the liquidity conditions will panout? We were not expecting RBI to come out with OMOs (open marketoperations) as early as in March, but the volatility in the foreignexchange market forced the central bank to intervene and theliquidity got impacted. So, the only way to offset the impact wasto conduct OMOs. This, coincidentally, helped the bond yields, as they did notharden to nine per cent levels, as expected earlier. Going forward,the liquidity situation may depend a lot on the centralbank"s foreign exchange intervention, as credit growthgenerally remains muted in the first quarter of the financial year. What can be done to develop the corporate bond market? One should really look at revising the withholding tax for foreigninstitutional investment in bonds. For them, investing in bonds isa margin game where they hardly earn one-two per cent. Now if youare going to charge 20 per cent tax on gross income from a 10 percent coupon rate bond, why will they invest? It has to bedrastically brought down to make debt attractive. It will solve twoproblems — it helps the government securities market and youwon"t need to go for Resurgent India Bonds or IndiaMillennium Deposits. Recently, banks have launched internet platforms to enable retailparticipation in government bonds. What do you think will be theresponse? Unless there is an attraction, why will anybody buy government ofIndia bonds when bank deposits are giving you higher returns? Thereis no rate or credit advantage. It is not a question of access. Ifgovernment debt is made attractive, people will figure out a way toinvest and take advantage. We are high quality suppliers, our products such as Acrylic Pop Display , China Fabric Pop Up Displays for oversee buyer. To know more, please visits Acrylic Display Holders.
Related Articles -
Acrylic Pop Display, China Fabric Pop Up Displays,
|
