Capacity utilisation is still around 70%, says Sood of the economic recovery
India should continue with an accommodative interest rate stance, as long as necessary, to sustain and further pick up the pace of economic growth, so that respite from the COVID-19 cases is fully taken advantage in a global scenario still marked by concerns over pandemic and high energy prices, ASSOCHAM has said.
“While concerns over inflation, especially in the Wholesale Price Index (WPI), need to be addressed, measures other than reversal of accommodative stance should be encouraged,” ASSOCHAM Secretary General Deepak Sood said in a release on 24 Nov 2021.
“The RBI and its Monetary Policy Committee (MPC) have done a commendable job to retain the present policy rates. However, central banks in some of the developed economies are moving towards tapering the accommodative policies.
“We are sure and as we have been maintaining that the RBI would not follow this template and continue with the low interest rates,” Sood added.
The soft interest rates and several other pro-active measures by the RBI and the Government have enabled India to weather the COVID-19 storm. These policies, coupled with some bold economic reforms in defence manufacturing, disinvestment and national monetisation pipeline have helped the overall business sentiment, with the result that the GDP growth in the FY2021-22 is expected to touch the double digit figure, he said.
Global initiative by the crude oil importing and major consuming nations including the US and India should lead to rise in global supplies and soften prices.
“Crude oil prices are on a retreat because of a variety of reasons. What is being seen as significant, is a well-coordinated approach amongst the major consuming countries, including India to exert pressure on the oil producing and exporting countries. This seems to be paying off,” the ASSOCHAM Secretary General said.
“While the Indian economy is on a fast recovery path, our capacity utilisation is still around 70%. Some of the supply issues are being addressed even as the global value chain should get further streamlined.
“It is true that banks are flush with liquidity, but the credit demand is yet to pick up especially for private investment. We see this too happening, but any reversal of accommodative interest rate stance may dampen faster revival in investment,” he said. #banking #investment /fiinews.com
