RBI turns bullish towards inflation

By agencies   |   Tuesday, 25 July 2006, 07:00 Hrs
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MUMBAI: RBI’s latest industrial outlook survey said the business expectation index will show an improvement during July-September.

While working capital finance needs are expected to increase, the availability of finance is also expected to improve, said RBI.

Notwithstanding heaving interest rates and the threat of inflation, the Reserve Bank of India remained highly bullish on the growth front .The apex bank said the policy would contain the year-to-year inflation rate for 2006-07 in the range 5-5.5 percent, as projected earlier.

According to RBI sources, the collected data for 2005-06 showed that almost 30 percent of incremental non-food credit has gone to the industrial sector, with 14 percent of it on account of housing loans and 12 percent of incremental non-food credit absorbed by the agricultural sector. The infrastructure sector accounted for about one-fourth of incremental credit to the industry, while textile and iron and steel industries absorbed another one-fourth.

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