The Indian industry has expressed disappointment over the Reserve Bank of India’s decision to keep policy (repo) rates unchanged at 7.25 per cent stating it would hinder growth.
Jyotsna Suri, President, Federation of Indian Chamber of Commerce & Industry (FICCI) said “The decision of Central Bank is disappointing for the industry. Given that the industrial growth still remains volatile and demand conditions have not seen much improvement, there is a need to give policy stimuli to encourage demand and investments.”
She said with a pickup in the monsoons, inflation was expected to remain range bound and within RBI’s indicative trajectory. Additionally, the latest capital support provided by the Government to the public sector banks should enable effective transmission into lower lending rates.
Commenting on monetary policy, Chandrajit Banerjee, Director General, CII said, “No doubt, CII appreciates the RBI’s concerns about the anticipated pipeline risks arising from inflationary expectations and unfavourable external developments. At the same time, credit demand is weak and corporates and banks are grappling with a large number of stressed assets, particularly in the infrastructure sector. A cut in interest rate in such a situation would have done much to restore the investment cycle.”
Real estate developer Rajesh Prajapati, MD, Prajapati Constructions said, “ The status quo by RBI is discouraging for home buyers as well as developers. The entire buyer-developer community was expecting the reduction in the interest rate; so that the burden of EMI could have come down. However, the RBI disappointed all.”
“The absence of RBI rate action was on expected and understandable lines, but one can't help the aftertaste of disappointment and doubt, whether an opportunity was missed for setting a lower interest rate trajectory to engender benign investment climate,” said VS Parthasarathy, Group Chief Financial Officer, Mahindra & Mahindra Ltd.
