FICCI calls for comprehensive roadmap-coordinated action at multiple levels
Reacting to the Reserve Bank of India’s fourth consecutive pause on policy rates keeping it unchanged at 6.5%, FIEO President Dr A Sakthivel said that it will further help in building up on the growth momentum and containing inflation at the same time.
“With both US Fed and UK Central Bank pausing the interest rates, the decision of the Central Bank is on expected lines of continuing to maintain status quo on policy rates front,” he said.
The RBI feels that the MPC decision is focused towards the objective of achieving inflation target of 4%, while supporting growth, he reiterated.
The decision to keep policy rate unchanged will continue to give boost to growth through increasing investments. The less kharif sowing, on the back of monsoon woes, impacting the inflation projection still remains the key concern for the Central Bank.
However, positive growth momentum in services and consumer confidence, are expected to bolster household consumption.
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%, he noted.
The FIEO President said that the increasing investment will lead to further enhanced manufacturing and production thus easing supply and reducing inflation in coming months.
Dr Sakthivel also added that the status quo in rates 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.
He 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.
Besides, restoration of Interest Equalization benefit of 5% for manufacturer MSMEs and if possible, to 3% to 410 tariff lines to help the foreign trade especially exports.
“The resilient external sector growth backed by financial sector push will help in giving more thrust to the economy,” he said.
Separately, FICCI President Subhrakant Panda says RBI decision to keep the Repo rate and overall stance unchanged was largely expected, as it has been emphasising on withdrawal of accommodation and supporting growth.
“But inflation needs to be closely monitored, but it seems to have peaked and a correction in prices over the near term looks probable,” he said.
“In line with the Monetary Policy Committee’s observation on recurring food price shocks impacting both the inflation trajectory and its persistence, FICCI reiterates that de-risking food supply chains from weather related disruptions should be a priority.
“This calls for a comprehensive roadmap and coordinated action at multiple levels,” Panda added.
Further, FICCI looks forward to the draft omnibus framework pertaining to recognising Self-Regulatory Organisations for various Regulated Entities of the Reserve Bank of India as stakeholder consultations will lead to a more robust outcome.
FICCI also welcomed the extension of the Payments Infrastructure Development Fund Scheme by two years and its expansion to include the PM Vishwakarma Scheme. Fiinews.com
