India Inc hails RBI's inflation outlook, says repo rate on 'expected' lines

The MPC has prudently voiced concerns about the possible interplay of domestic and global risk factors, said Chanda Kochhar

India Inc welcomed the Reserve Bank of India's downward revision of inflation rate in its first monetary policy review of 2018-19, which kept short-term lending rate unchanged, calling it "expected".

The RBI on Thursday maintained the status quo on its key short-term lending rate at 6 per cent, along with its 'neutral' stance, at the first bi-monthly monetary policy review of the new financial year.

According to RBI monetary policy statement, the central bank lowered its inflation forecast for the first-half of the current financial year to between 4.7 per cent and 5.1 per cent, and 4.4 per cent for the second-half, "including the HRA impact for central government employees, with risks tilted to the upside".

This is what the industry players and analysts had to say:

Sandeep Jajodia, Assocham President, said: "The RBI has rightly flagged certain issues like the impact of MSP (Minimum Support Price) revision on the prices and possible fiscal slippages at both the Centre and the states."

"RBI's Monetary Policy Committee to keep the benchmark lending rates unchanged is on the 'expected' lines," Assocham said, due to the concerns "regarding upside risks to inflation arising from possible fiscal slippages, volatility in crude prices and revised formula for the MSP for kharif crops".

Rajnish Kumar, State Bank of India Chairman, said: "More than the RBI decision to keep rates unchanged, the tone of the policy is a pleasant surprise for the market. The decision to revise downwards the inflation projections and upwards the growth numbers is the best one could have asked for."

Chanda Kochhar, ICICI Bank MD and CEO, said: "The significant positive in the monetary policy was the downward revision of inflation projections. The MPC has prudently voiced concerns about the possible interplay of domestic and global risk factors that could play out over the medium term."

Anis Chakravarty, Deloitte India Lead Economist and Partner, said: "On anticipated lines, the Monetary Policy Committee (MPC)... kept the policy rate steady on domestic and global cues."

Although there are upside risks to inflation "the policy has speculated food price inflation to remain within comfortable range and is likely to ease inflationary pressures to some extent".

Rajesh Shah, Ficci President, said: "While the Reserve Bank of India has maintained status quo in current monetary policy statement, we hope that RBI will soon consider cut in policy rate and give a further boost to demand and investments."

FICCI hopes that going forward RBI will adopt an accommodative stance and thereby give a boost to demand and investments. This is critical for transcending to higher growth trajectory as well as to create more job and work opportunities.