The Reserve Bank today said the soft monetary policy adopted by it to counter the impact of the global financial meltdown on the country will continue till the economic recovery is secured.
“Especially on monetary policy, we will not exit unless we are sure that recovery is secured …but soon thereafter when we make the judgment that the recovery is secured, we have to unwind the accommodation monetary policy,” said RBI Governor, D. Subbarao.
However, the Governor added, the government and the RBI will have to take a call on exiting from stimuli given for perking up the slowing down economy sooner than most of the countries. He said RBI will look at number of factors like WPI inflation, CPI inflation, components within inflation, industrial growth and credit expansion while unwinding the soft monetary policies.
Higher Risk Cover For Exporters In India
On a move that will provide cushion to Indian exporters in uncertain global markets, and improve risk coverage, the government will provide a higher insurance cover to the sector. State-owned Export Credit Guarantee Corporation (ECGC), which promotes exports by providing cover to export risks on credit, has promised to increase risk cover of exporters by 5%, according to a senior ECGC official.
The risk cover, given to banks by ECGC for its loans to exporters, will be increased by 10%. To provide this additional credit cover to exporters and banks, ECGC will utilize an amount of Rs 350 crore allocated to it by the Center under the corpus of the national exports insurance, which is being set up to support medium- and long-term business.
The amount was earmarked by the government to increase insurance coverage for exporters earlier this year as part of its incentive package to help the Indian industry survive the global slowdown. ECGC expects an initial cover to banks and exporters will not exceed Rs 60 crore in the current fiscal year.