RBI had the opportunity to revive growth, says ASSOCHAM

CORPORATE

RBI had the opportunity to revive growth, 

says ASSOCHAM

While the Reserve Bank has genuine concerns over risks to the CPI inflation which may stem from a possible shortfall in Monsoon and outlook for fiscal policy of the new government, the RBI had the opportunity to give growth a chance to reinvigorate by reducing the policy interest rates and reviving the investor sentiment, ASSOCHAM President Mr Rana Kapoor said. The apprehensions about the inflation rearing its head again may prove to be misplaced.

“RBI Governor Dr Raghuram Rajan himself has expressed concern over the fact that subdued industrial activity continues to be a drag on the economy….The interest cost is one of the key components of the industrial output on the one side and demand revival on the other. Thus, the boost to industrial demand by lower borrowing costs deserved a consideration,” said Mr Kapoor.

However, the ASSOCHAM lauded the initiatives by the RBI to make entry of foreign investors easy into the Indian financial markets by simplifying the KYC norms….This would go a long way in continuation of the foreign flows which have their own positive and multiplied impact on the macro picture.

The ASSOCHAM chief said, it would be too early to become overcautious about the renewed risks to inflation and the focus should be debottleneck the supply side and the efforts must continue in this direction by the incumbent government even before the change of guards at the Centre….After all, the inflation should not be made contingent on the electoral process, which should take place seamlessly.  Revival of growth should become the number one priority at this point of time, he said.