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[nahia]

Commenting on the monetary policy 2011-12 by RBI, Pradeep Jain, chairman, Parsvnath Developers Ltd and chairman, Confederation of Real Estate Developers’ Association of India (CREDAI), said, “The 50 bps hike in Repo Rate and Reverse Repo Rate by RBI bringing them to 7.25 per cent and 6.25 per cent respectively is harsh. This will intensify the cash crunch scenario which industry is facing right now. Along with this it also increased the Saving Bank Deposit Interest Rate to 4 per cent which will add pressure on cost of funds for banks.

The apex bank must think about the industrial growth which has moderated in last few quarters. Taking fund out of the market can not be the only solution to tame inflation. The current pressure on prices is global in character and reflects supply side bottleneck. The solution is not monetary tightening. This step by RBI will further affect the demand-supply matrix of industry which is so far going good.

Real Estate is a sentiment driven industry and any punch on the sentiments of buyers can bring a halt to the growth it has shown post slowdown. I appeal to RBI to act strong on restricting rising prices which threaten to derail the country’s economic growth but not at the cost of flow of fund.”