ASSOCHAM

RBI again disappoints India Inc, misses opportunity: ASSOCHAM President

  ASSOCHAM chief- Mr Rajkumar Dhoot

The Reserve Bank of India has once again deeply disappointed the industry which was expecting it to worry about a sharp deceleration in growth and go in for a substantial cut in the interest rates.

The 25 basis points cut in the CRR rate would somewhat address the problem of liquidity and the banks may also be prodded into marginally reducing the retail loan, but these steps will certainly not curb the problems that the Indian industry is facing.

 RBI and the government both have recognized that the high cost of funds has become one of the big issues not only for the manufacturing but also for the consumers in several interest-sensitive sectors like automobile and housing. Besides, exporters who have   been facing harrowing times in the international markets are feeling the heat of increasing cost of money. Manufacturing is becoming unviable and new investment have receded significantly.

 “ASSOCHAM is concerned over the fact that the RBI has missed an opportunity to use the monetary policy to pump the demand, especially in the coming festive season.  The sentiment, which looked up after the Centre took courageous reforms friendly decisions like FDI in multi-brand retail and hike in diesel prices has been negated by the RBI inaction today,” said the ASSOCHAM chief, Mr Rajkumar Dhoot said.

 Mr. Dhoot has been stating that the only way to beat inflation is to increase supply which can be brought about by augmenting production and investment. But, unfortunately, there is a one-way direction that the RBI has been following rather unsuccessfully.