Indian economy needs stimulus package: HSBC chief

Indian economy needs the stimulus package to continue and the Reserve Bank might not reverse its expansionary monetary policy, which is to be reviewed by the RBI on Tuesday, HSBC India [ Images ] group chairman and country head Naina Lal Kidwai [ Images ] said.

"The (RBI) governor is clearly concerned about inflation, while he fully understands that having expansionist monetary policy has been important to provide the stimulus we need," Kidwai told reporters after a conference on micro-finance.

"Personally, I expect the rates to remain flat. Besides, RBI does not need to wait for credit policy, it can revise (key) at any time when the need arises," she said. It is important that the stimulus packages, announced by the government and the RBI in the wake of the the global financial meltdown, continues as the country is just beginning to see revival in industry, she said, adding that by December India might see some actions from the central bank on hiking policy rates.

Around that time, pressure on interest rates is also expected to start showing, Kidwai said and added that credit offtake has slightly improved in the last couple of months.

Though fiscal deficit is a concern, the country needed spending to boost the economy hit by financial crisis, she said. Going by the bank's research, Kidwai said India is likely to grow at 8 per cent in next fiscal 2010-11.

Image: Naina Lal Kidwai