Industry heads, on Tuesday, hailed the reduction in policy rate by the Reserve Bank of India, and remained optimistic about further cuts in key rates in future.“The RBI’s decision to go in for another round of policy rate cut was very aptly timed, and was almost indispensable to revive the confidence of industry. We believe this will certainly lend some support to the flagging industrial growth,” said Naina Lal Kidwai, President, Federation of Indian Chambers of Commerce and Industry (FICCI).

Ms. Kidwai remained hopeful that the RBI would follow this up with further cuts even though it had signalled that the scope for this remained limited.

Confederation of Indian Industry (CII) President Adi Godrej said: “At a time when industrial production is showing nascent signs of an upturn, current account deficit is slated to drop on account of improved global conditions and there are expectations of a normal monsoon, it is necessary that the RBI provides the boost to green shoots of recovery.” Mr. Godrej called for further cuts in interest rates at the earliest.

Planning Commission Deputy Chairman Montek Singh Ahluwalia considered the RBI’s monetary policy review a ‘good signal for turnaround in interest rate environment’.

“I am glad that by lowering the repo rate by 25 basis points, RBI has signalled a continuing reduction of the rate and that it believes that macro-economics is turning around. Though many people in the industry feel that it should have been more robust than 25 basis points, the important thing is that RBI is giving a signal that they perceive inflation is beginning to come under control. They are persuaded that fiscal deficit reduction is giving fiscal space and so they are signalling that there will be a turnaround in the interest rate environment,” he added.

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