Subprime, high rates won't hit plans: CEOs

NEW DELHI: The US subprime crisis and the high interest rates at home would not impact investments planned for the current financial year, feel the majority of India’s top corporate leaders.

In a CEO snap poll conducted by CII, 89% respondents said they expect investments in their companies to be on track during the current financial year. On the impact of the US subprime crisis on India, 57% CEOs felt it would impact portfolio inflows during the current year but not FDI.

Most CEOs also do not expect any impact of the subprime crisis on domestic interest rates. The majority of the country’s top executives also felt interest rates should be reduced to encourage greater investment.

With inflation under control, 69% of the CEOs expect interest rates to be lowered to about 12% (prime lending rate) from 13.25% now. According to CII, India would need investment in excess of 36% of GDP to push growth to 10%.

Most respondents expect the rupee-dollar exchange rate to stabilise and 87% expected the median exchange rate to be around Rs 40. An increase in trade deficit is also foreseen.