RBI monetary policy evokes mixed reactions from Chambers


New Delhi, Dec 6 (UNI) The Reserve Bank of India’s (RBI) decision to maintain status quo on the repo rate and the reverse repo rate, in its fifth bi-monthly monetary policy review for 2017-18 on Wednesday, has evoked mixed reactions from industry bodies.

Commenting on the Monetary Policy, CII Director General Chandrajit Banerjee said a reduction in interest rates would have given the necessary signal that fiscal and monetary policies are working in consonance to give a boost to growth.

He expressed hope that RBI would shift its policy stance from neutral to accommodative and effect a cut in interest rates in the next meeting to revive domestic demand, thus providing a fillip to broad-based investment activity, which was yet to take off in a big way.

Saying that growth concerns were still alive, ASSOCHAM President Sandeep Jajodia said, “While inflation weighed on the decision of the Monetary Policy Committee of the RBI, the growth concerns cannot be brushed aside either, as the cost of capital is still high in India,”.

He said India Inc continues to remain over-leveraged while the consumer demand is still subdued. Benign interest rates are solutions to both these issues.

As for inflation, the RBI has genuine concerns but the message must be picked up by the Government to fix the supply side, especially in the items of common use, he added.
Another industry body FICCI has expressed disappointment over the the RBI’s decision to hold on to the policy rate at the current level.

“A downward revision would have boosted sentiment and supported the growth momentum that we are seeing building up following the second quarter GDP numbers,” FICCI President Pankaj Patel said in a statement.

A cut in the policy rate with some more targeted intervention in the form of easing conditions for extending housing loans would have provided the needed stimulus and complemented government’s own efforts to lend strength to the economic recovery process”, Patel said.