With RBI keeping the policy rate on hold, India Inc today said a rate cut is imperative to lower cost of funds for the industry and spur investments, crucial for sustaining high economic growth. “A rate cut would have been spot-on for rejuvenating the investment cycle. We hope RBI would resume the rate-cutting cycle in the subsequent monetary policy soon after the Union Budget to complement the government’s efforts to revive private investments and bring the economy back to sustained growth,” CII Director General Chandrajit Banerjee said.
“Though the policy statement does hint at opening the space for easing interest rates in the near future, the Central bank has chosen to make it conditional on fiscal tightening and implementation of structural reforms by the government. He also added that a rate cut would have been spot on for rejuvenating the investment cycle,” he added.
“The slip-up in industrial growth as reported in the November numbers indicates persistence of underlying weakness and the fact that we are still away from a firm turnaround. “The demand situation remains weak and the cost of funds for the industry has not really come down. Bringing down interest rates is imperative to propel investments,” Ficci president Harshavardhan Neotia said.
“Amid the recent economic developments in the world economy and impact on our financial markets, RBI should have reduced repo rate by at least 25 basis points to build not only the investors’ confidence, but also to support consumers who are impacted by the burden of EMIs,” PHD Chamber president Mahesh Gupta said.
Abheek Barua, chief economist, HDFC Bank, said the RBI gave clear indications that it would like to wait until government’s annual Budget announcement, due at the end of February, before taking additional measures.
Crisil said RBI wants to tame consumer price inflation (CPI) to 5% by March 2017 — or a clear percentage point lower than its March 2016 target. This will be a tough task if the Seventh Pay Commission recommendations are implemented and the monsoon remains inadequate.
“Though the policy statement does hint at opening the space for easing interest rates in the near future, the Central bank has chosen to make it conditional on fiscal tightening and implementation of structural reforms by the government. He also added that a rate cut would have been spot on for rejuvenating the investment cycle,” he added.
“The slip-up in industrial growth as reported in the November numbers indicates persistence of underlying weakness and the fact that we are still away from a firm turnaround. “The demand situation remains weak and the cost of funds for the industry has not really come down. Bringing down interest rates is imperative to propel investments,” Ficci president Harshavardhan Neotia said.
“Amid the recent economic developments in the world economy and impact on our financial markets, RBI should have reduced repo rate by at least 25 basis points to build not only the investors’ confidence, but also to support consumers who are impacted by the burden of EMIs,” PHD Chamber president Mahesh Gupta said.
Abheek Barua, chief economist, HDFC Bank, said the RBI gave clear indications that it would like to wait until government’s annual Budget announcement, due at the end of February, before taking additional measures.
Crisil said RBI wants to tame consumer price inflation (CPI) to 5% by March 2017 — or a clear percentage point lower than its March 2016 target. This will be a tough task if the Seventh Pay Commission recommendations are implemented and the monsoon remains inadequate.
