“The Q2 GDP for FY15 registered 5.3% growth rate beating market held expectations of below 5% growth. However there is a dire need for momentum for the economy to go forward.
Weak demand in the economy coupled with rapidly declining inflation calls for growth friendly monetary policy. With consumer price inflation falling to 5.5 percent in October and crude oil prices falling to a four-year low the RBI should have factored monetary accommodation by lowering key policy rates. It is indeed a lost opportunity for the industry”, said Mr. Vijay Kalantri, President, All India Association of Industries and Vice Chairman, MVIRDC World Trade Centre voicing his views on the bimonthly monetary policy of the RBI.
Citing monetary policy as a major instrument to promote growth in the economy Mr. Kalantri said that all macroeconomic parameters comprising of the GDP, CPI, WPI, oil prices reflected a conducive environment to reduce interest rates. A pro-growth monetary policy would have given thrust to India’s corporate performance besides yielding support to the ailing MSME sector of India, Mr. Kalantri added.
The Reserve Bank Governor Raghuram Rajan maintained status quo in today’s bi-monthly policy. The repo rate stands unchanged at eight percent while the reverse repo rate is seven percent. The cash reserve ratio (CRR) for banks has been fixed at four per cent.
Going forward, the RBI is likely to be in wait-and-watch mode before taking any call on the policy rates. There is uncertainty about the evolution of inflation, the strength of the on-going disinflationary impulses as well as the success of the government’s efforts to hit fiscal deficit targets, Mr. Kalantri added.