Industry, on Tuesday, expressed displeasure over the status quo approach adopted by the Reserve Bank of India in its monetary policy.
“While the policy was on expected lines, a rate cut would have been favourable. We, as a country, are shooting for higher growth rates and since policy rate actions work with a lag, the RBI could have helped spur higher growth expectations, especially given the other data points on inflation, slow growth and investment,” said Mahindra & Mahindra Chief Financial Officer V. S. Parthasarathy.“The auto industry is still looking for strong revival of demand and lower interest rates would have helped the cause,” Mr. Parthasarathy added.
The Associated Chambers of Commerce and Industry of India (Assocham) said the RBI obviously overlooked strong demand from industry for a cut in interest rates. “Industry’s demand for lower interest rates was fully justified,” it said.
“The concerns over inflation have largely been addressed with crude oil prices dropping by the day. Secondly, growth remains muted with second quarter numbers at 5.3 per cent staying lower than the first quarter. Certainly, if we need to really go in for the ‘Make in India’ initiative in the right earnest, the growth must be given priority, Assocham President Rana Kapoor said.
Confederation of Indian Industry President Ajay S Shriram, said even a symbolic cut in policy rates at this juncture would have sent a strong signal down the line that the government and the RBI acting in concert to harness demand and take the economy to the higher orbit of growth.
“Industry was particularly hopeful of a rate cut considering that China has surprised the market by reducing interest rates by 40 basis points to attract investments. A rate cut would have propelled investment demand, spurred spending and given a fillip to construction activity,” Mr. Shriram said.
