Reeling under slowdown, India Inc. today hailed the Reserve Bank of India’s move to reduce repo rate and CRR by a quarter per cent, saying it will spur growth and ease the prevailing tight liquidity condition.
FICCI president Naina Lal Kidwai said: “This will hopefully help in reversing the anaemic industrial growth observed over the last year. In fact, high borrowings under the liquidity adjustment facility (LAF) window seen in the recent past clearly reflected the tight liquidity situation. The CRR cut of 25 basis points would help release Rs. 18,000 crore, thereby easing the funds flow situation.”
“It is a positive step which will infuse liquidity and help in catalysing growth,” Industry Minister Anand Sharma said in Agra on Tuesday.
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Industry houses are emphatic with repo rate cut and CRR by 0.25 per cent each after a gap of nine months in its third quarter monetary policy review.
“It was much needed given that the GDP growth is moderating and industrial production was decelerating month after month. The rate cut is an encouraging move, as high interest rates were having negative impact on the country’s economic growth,” JSW Steel Joint Managing Director and CFO Seshagiri Rao said.
Assocham President R.N. Dhoot said: “The reduction is a step in the right direction. However, the system has to take this in the true spirit and the benefits have to be passed on to the end users.”
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Planning Commission Deputy Chairman Montek Singh Ahluwalia said the CRR cut will have impact on long term interest rates. “I think this is the right thing to do at this point of time given that (the decline) in economy is beginning to bottom out,” he said.
Prime Minister’s Economic Advisory Council Chairman C. Rangarajan said: “RBI has taken a very balanced view. This will ensure that stimulus is provided to growth while continuing efforts to contain inflation. The RBI will cut rates if inflation behaves as per its projection.”
On inflation, the RBI moderated the rate to 6.8 per cent for March-end from the earlier projection of 7.5 per cent.