RBI policy stance not totally unexpected: Ficci

FIcci president Naina Lal Kidwai opines that investment sentiment has to be supported constantly

The Reserve Bank of India (RBI)'s decision to keep policy rates and Cash Reserve Ratio (CRR) unchanged was not totally unexpected, said Federation of Indian Chamber of Commerce and Industry (Ficci).

"With some of the earlier concerns like inflation, negative IIP growth slowly receding, and performance of the monsoon being reassuring, the situation does appear to be improving and it is hoped  that investment is in high focus  as it needs a  boost to trigger  growth”, said Naina Lal Kidwai, President, Ficci.

Kidwai said that the investment sentiment has to be supported constantly. Ficci’s recent Business Confidence Survey (Q4 FY13) pointed out that nearly 74% of the participants reported if the lending rates are not brought down with immediate effect it would have a serious to moderate impact on their investment plans.

"As the monetary transmission mechanism has been weak, RBI will need  to focus on the outcome of lower lending rates by banks," she said. According to Kidwai, despite the 75 bps cut in repo rate so far this year, the investment sentiment hasn’t really become buoyant and  apprehensions remain.

Ficci has said that the industry will have to remain on guard to tackle stress  caused by the sudden fall in the  rupee, which they believe RBI most certainly would as and when required.

In the mid-quarter review of the monetary policy held today, the Reserve Bank of India (RBI) kept key policy rates and the Cash Reserve Ratio (CRR) unchanged. The repo rate stands at 7.25% while the reverse repo rate stands at 6.25%. The CRR remains at 4% of banks Net Demand and Time Liabilities (NDTL).