FICCI Manufacturing Survey had indicated revival of private capex, says Panda
India’s exporters’ federation feels that the status quo in rates, maintained by RBI at 6.5%, will help exporting community, whose cost of credit has gone up substantially due to upward revision in rates during last one and half year leading to the demand to increase the interest subvention from 2% and 3% to 3% and 5%, respectively.
“The decision to keep policy rate unchanged will further give boost to growth through increasing investments,” said FIEO President Dr A Sakthivel as he welcomed Reserve Bank of India’s third consecutive pause on policy rates keeping unchanged at 6.5% on 10 Aug.
“It will further help in building up on the growth momentum and containing inflation at the same time.”
FIEO Chief, however, reiterated that in order to provide momentum to the external sector, the need is of the hour is to further provide extension to the Emergency Credit Line Guarantee Scheme by one more year till 31 March 2024.
“The resilient external sector growth backed by financial sector push will help in giving more thrust to the economy.”
“RBI has adopted a balanced approach by maintaining status quo on policy rates which will support growth while targeting inflation which has inched up recently,” added FICCI President Subhrakant Panda.’
“The outlook remains clouded due to possible El Niño conditions, and tough global outlook calls for careful monitoring even as the policy stance remains withdrawal of accommodation while allowing previous interventions to flow through the system.”
“The FICCI Manufacturing Survey had indicated revival of private capex on the back of the government’s significant outlay and business optimism which has been reiterated by the Governor.
“We also compliment the RBI on facilitating innovative measures such as ‘conversational payments’ on UPI which will expand the scope of digital payments,” said Panda.
“The fine balancing act and diligent approach to steer the economy through a challenging phase is commendable,” he added.
With both US Fed and European Central Bank increasing the interest rate by a quarter percentage point, a section of trade and industry was of the view that RBI will continue to follow the same path of maintaining the status quo on policy rates front, noted Dr A Sakthivel.
RBI feels that the MPC decision is focused towards the objective of achieving medium-term target of consumer price index (CPI) inflation of 4 percent within a band of +/-2 percent, while supporting growth, reiterated FIEO Chief.
While most Central banks have given more weightage to inflation as compared to growth, RBI has struck a nice balance between the two, giving primacy to growth, thereby maintaining the GDP growth forecast for FY24 at 6.5 percent. Fiinews.com
