Terming RBI's policy as "harsh and disappointing", India Inc today asked the central bank to cut interest rates before January 29 policy review to boost economic growth.
Industry body CII said with the government having announced a clear road map for fiscal consolidation and non-food inflation demonstrating a secular decline, conditions are conducive for RBI to have intervened with a repo and CRR reduction.
"We hope that the RBI would not wait for the next quarterly review, but would recognise the enormity of the problem and intervene sooner than that," CII Director General Chandrajit Banerjee said
He added that the industry is looking at the central bank for some relief with interventions which would help availability of capital at lower rates. Describing central bank decision as 'harsh and disappointing,' Assocham President Rajkumar Dhoot said, "Our hopes of seeking some relief are dashed as the apex bank has yet again given away the opportunity to help reverse the business sentiments and see investments taking place." The Reserve Bank today kept the key interest rates unchanged but hinted easing of rates in January saying with decline in inflation, the focus of monetary policy would shift to removing impediments to growth. The RBI left the short-term lending (repo) rate and the Cash Reserve Ratio (CRR) unchanged at 8% and 4.25%, respectively. Ficci said inflation numbers should provide the central bank comfort to begin to consider a rate cut early in the next year. "With the inflation numbers showing a decline and the global economy still in a difficult situation, industry is crying out for an impetus for investment and growth.
Lower interest rates would be oxygen to the sentiment which is beginning to turn positive," Ficci President Naina Lal Kidwai said. The WPI inflation in November moderated to 7.24%, but retail inflation remain elevated at 9.90%. The Indian economy grew by 5.4% in the first half (April-September) of the current fiscal, against 7.3% in the corresponding period last year.