Kamath sees no slowdown

Mumbai, May 22: Off-Budget items can hit the Centre’s Fiscal Responsibility and Budget Management target, said Mr K.V. Kamath, managing director and CEO, ICICI Bank, on Thursday.

The finance minister, Mr P. Chidambaram, had said in his 2008-09 Budget speech that the fiscal deficit target for the current financial year was 2.5 per cent of gross domestic product (GDP) and revenue deficit at one per cent of GDP.

Off-Budget items include oil and fertiliser bonds. In 2007-08, the off-Budget items included oil and fertiliser bonds worth Rs 42,800 crore, of which Rs 15,000 crore of bonds are yet to be issued.

Fiscal deficit in 2007-08 will be four per cent of GDP if the off-Budget items are included, compared with the Budget estimate of 3.1 per cent.

Mr Kamath also hinted that interest rates are expected to remain steady as liquidity has remained comfortable, despite the Reserve Bank of India’s recent hikes in banks’ cash reserve ratio.

"Even after the monetary policy, liquidity is comfortable. This comfortable liquidity is a key signal on rates," he said at a media interaction.

The RBI hiked its CRR twice in April by 75 basis points to eight per cent to contain inflation.

He said there is no slowdown in investment in the country, one of the fastest-growing economies which is currently focusing on controlling inflation that has hit a four-year high.

India’s inflation rate shot up above seven percent in April, for the first time in three years. It hit a 44-month high at 7.83 per cent for the week ended May 3. Mr Kamath also reiterated that he is not seeing any slowdown in investment by the corporate sector.

He, however, cautioned that if interest rates continue at the current levels then the demand may slacken.

"We have seen consumer goods growth slowed down last year," Mr Kamath said, citing higher interest rates as the reason. (NW18)