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Reserve Bank of India is becoming over-cautious in reading the potential risks to the economy and staying stubborn with the hawkish monetary policy to the detriment to the industrial growth, industry body Assocham has said.
The symbolic 25 basis point cut in the repo rate is not going to translate into any reduction in the interest rates at the ground level.
"The EMIs for personal loans are not going to change; the interest costs for the industry is going to stay heavy and the investment trigger would stay absent," Assocham President Rajkumar N Dhoot said in a statement here.
He said given a clear trend of the global quantitative easing by the central banks and a sharp correction in the crude oil and gold prices, the risks to the current account deficit have definitely declined. But the RBI lists the CAD as the biggest risk.
"This is certainly over-reading into a situation and a threat which does not exist, but such a reading is hurting the industry by way of a stubborn monetary policy which, somehow seems determined to bring the inflation further down. The trade-off with the growth is exceedingly high," the chamber president said.
