Reserve Bank of India’s (RBI) decision to keep key rates unchanged evoked mixed reaction from trade and industry with one section expressing utter disappointment while other section understanding apex bank’s concern to contain inflation.

In the wake of cut in the U S interest rate and ongoing sluggishness in key manufacturing sector the industry was quite upbeat about RBI opting for a softer interest rate regime. But RBI kept all key rates including banks rate and cash reserve ratio unchanged in a bid to maintain financial and price stability.

Assocham President V N Dhoot said “we fear that continued policy indifference may compel the industry to postpone its investment plans in expectation of demand slowdown.” 

Difficult to cope

The restraint shown by RBI would make it difficult for some industry segments to cope up with the slackening demand, rising imports and high borrowing cost, he added.

Ficci President Habil Khorakiwala said RBI could have done some rethinking on interest rate regime and fine-tuned the rates.

A revival in the growth of industry and services, he said, is essential to sustain a high rate of economic growth.

The RBI could have shifted its emphasis to sustaining overall growth momentum, he added.

However, Confederation of Indian Industry (CII) said the focus on keeping inflation under control was ‘understandable.’ “There is an underlying focus on stability, which is conservative. In uncertain times, this is strategically good stance, as long as RBI explicitly makes it known that it can take any action pertaining to key rates if the situation demands,” CII said in a statement.

The PHD Chamber of Commerce & Industry said a rate cut would have reinforced the growth momentum in an otherwise lacklustre industrial growth.

“RBI has been over cautious in its approach as it is driven by liquidity management and price stability,” Chamber President L K Malhotra said.