ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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And So to the Squeeze

The reserve bank has enforced a credit squeeze in the sixth month of the busy season, which technically closes at the end of this month but is likely to extend into May.

The reserve bank has enforced a credit squeeze in the sixth month of the busy season, which technically closes at the end of this month but is likely to extend into May.

For Ave months — a period of sustained price rise and disappointing performance in industry and agriculture—banks were given free rein to expand credit, a facility which the banks exploited to the full. The Reserve Bank had liberalised its credit policy at the start of the busy season in anticipation of foreign aid bounties bringing into use idle industrial capacity and sustaining a rising rate of economic growth. But aid was delayed despite devaluation; overall industrial production showed only a marginal rise; and a slack emerged in certain sectors of the industrial economy, in the Eastern region in particular.

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