RBI action on expected lines, says India Inc

RBI keeps rates unchanged, industry to hold fund raising plans till election results

Indian companies say the Reserve Bank of India action on keeping the interest rates unchanged is on the expected lines and CEOs say not many corporates are raising funds in the near-term. 
 

“Till the elections are over and a clearer picture emerge on the next government, most of the corporates are not planning to raise funds in a big way or spending in new projects. The RBI action today is not a surprise,” says Prabal Banerjee, President-International Finance of Essar group. The RBI decision is mainly influenced by the downward pressure on inflation in the recent period. 

 

Another CFO of a large corporate said he expected the RBI to cut the rates by 25 baisis points but now they will have to wait till the elections are over.
 

Most of the CEOs and CFOs had earlier forecast that the RBI will not raise the rates and instead prefer a status quo.

 

"While the RBI seems to be veering towards targeting consumer price inflation as its dominant guidepost, I believe this may result in a prolonged period of high rates this calendar without any real dampening of inflationary pressures. That’s because core consumer price inflation does notrespond well to monetary measures. In such a situation, growth and investments could be casualties in an already fragile environment, says Yogesh Agarwal, MD and CEO of Ballarpur Industries, a Avantha group Company. 

 

 "Going forward, much depends on non economic factors such as the elections which will be the main trigger come May. Risk of an El-Nino exerting upward pressure on food prices can’t also be ruled out. Inflation, both CPI and WPI have come off their highs but if it stays the course even at these levels, then rates will not come down before the latter half of the current calendar year, if at all," he added.