All-out Efforts Must Be Made To Ensure Significant Transmission Of Reduction In Interest Rates

Welcoming the latest 25 basis points cut in the policy interest rate to 5.15% by the RBI, the ASSOCHAM President B K Goenka said that given a sharp drop in the GDP growth estimates for the current fiscal by the RBI itself from 6.9% to 6.1%, all-out efforts must be made to ensure significant transmission of the reduction in the interest rates by banks at the ground level. The RBI Monetary Policy has rightly deliberated the challenges to growth, both internal and external. The MPC has also examined how the pricing power of the manufacturer has been reduced, given the demand compression even as inflation remains quite benign. Besides, the global economy, as highlighted by RBI Governor Shaktikanta Das, has further lost momentum. Under these circumstances, both fiscal and monetary policy measures are paramount to revive the demand push and investment in the economy. In this backdrop, the cumulative interest rate reduction of 135 basis points since February this year could be a critical push factor, provided the transmission by banks takes place in full earnest. However, the transmission, despite repeated nudging by the RBI and the government has not been commensurate with the rate cut and the prevailing low demand situation, noted the ASSOCHAM President.

Powered by Capital Market - Live News