Your initial thoughts on the RBI credit policy as neither the policy nor the Governor's statement is giving any kind of giveaways. Do you think this will happen post budget?
Ravi Uppal: Well you know the announcement by the RBI governor was along expected lines. Having given a rate cut last month, one was not expecting to drop the rates any further. But if I speak on behalf of the private sector, the investment is still not coming fromthe private sector. The commercial lending rates continue to be very high and even though the governor had reduced the repo rate earlier to 6.75 per cent, there was room to reduce it notionally by another 25 bps to acknowledge that eventually the lending rates from the commercial banks must drop. He should have also made an appeal to all the commercial banks to reduce their rates still further. For anyone who is borrowing money from the banks at a rate anywhere between 9.5 and 1213 per cent and given the stressed and unpredictable environment, not a lot of investment can be expected. Therefore, the private sector feels that today if they borrow the money at these rates, they are essentially working for the banks. That is number one.
Number two, those who have invested in the core sector whether it is power, steel, mining or infrastructure, still remain very stressed and would continue to have the NPA sword hanging over their head. It was very comforting to hear from the RBI governor that they will take a generous look to see how they can help the stressed sector by not hurrying up to declare them as NPAs. I think we have to have a financial package for the stressed sector because most of the problems are not unit specific but rather industry specific and many of them have happened because of the global trends in these sector. For example, take steel or infrastructure. Globally there is a demand which is in recession and at this point, all these sectors need to be handled with sensitivity and we need to device some packages to address their shortterm grievance.
ET Now: You are closely linked with two particularly stressed sectors, power and iron and steel. The government has taken a number of steps both in the power sector as well as in iron and steel. Will these measures suffice to ease some of the tension and some of the pressure on the players of these two sectors or have we not seen the end of the day, particularly as far as steel is concerned because there are reports of largescale dumping by China? As far as the power sector is concerned, it is always out of the frying pan into the fire but are you satisfied with the kind of measures that have been taken so far and how hopeful are you that these two sectors will see some kind of improvement?
Source: Economic Times