Mistake growth focus needed: A Mahendran

The monetary policy is disappointing. The expectation of a repo rate cut has not happened. Companies are looking for support, which is not in sight. While the concerns regarding inflation are valid, there is need to boost investment. With cost of finance still high, I see the lull in investments persisting. How, then, do you kickstart growth?

This issue will have to be addressed at some stage. The sooner this happens, the better. Which means initiating rate cuts in the third, rather than the fourth, quarter of this financial year would be a better option. You can then expect some momentum in investment, impacting gross domestic product growth this year. If rate cuts are pushed to the fourth quarter, the effects will be visible only in the next financial year. Speed is of essence here. Also, the reforms push by the government would have to be supported, which is why it is imperative for the central bank to concentrate on growth. I find the government and RBI moving in opposite directions, not the right signal to stakeholders.

A cut in the cash reserve ratio, while beneficial to the banking sector, hardly augurs well for companies. The need of the hour is to bring down the cost of capital.

A Mahendran
Managing Director, Godrej Consumer Products Ltd