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RBI has embarked on an important structural reform: Capital First Group

RBI has a glide path to reducing inflation to 6% by 2016 and 4% thereafter.

June 03, 2014 1:07 IST | India Infoline News Service
I am happy that by reducing SLR, the RBI has embarked on an important structural reform; by this the government will increasingly have to borrow at market linked rates, rather than have right to a spigot of money at artificially low rates. In that sense this is a welcome move in the right direction. It is also an important move to free up resources for the non-government sector. The worries that this may lead to the government borrowing costs going up should be set aside, as it will lead to more responsible borrowing by the government.

RBI has a glide path to reducing inflation to 6% by 2016 and 4% thereafter. The budget is crucial to set the direction, as we would like to see a fiscally responsible budget with a strong impetus for reforms in FDI, GST, divestment, and roadmap for DTC, which will set the tone for a positive business climate and low interest rates over the next few years.

V Vaidyanathan, Chairman, Capital First Group

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