JOIN USIndia Inc expressed its disappointment after the RBI raised policy interest rate on Tuesday while exporters said there should have been more support to exports in the policy moves.
“While Rajan has eloquently recognised the key role of exports in increasing India’s economic growth in the second half of the current fiscal, the exporting sector has registered a turnaround after a prolonged pain. Thus, the sector needs to be given a consistent and credible support both by the RBI and the government, if Indian goods have to be made competitive in the tough global markets, Engineering Export Promotion Council,” said in a statement.
"This has disappointed the industry especially as the investment climate continues to be weak and growth outlook remains muted as a high interest rate regime deters consumption and investment demand," CII Director General Chandrajit Banerjee said.
CII said RBI could have refrained from affecting the hike as the industry is reeling under pressures of high cost of capital and low availability in a tight liquidity situation.
Ficci Secretary General A Didar Singh said, "Given the slowdown in economic growth, weakening pace of investment activity and downswing in consumption, we were hoping that the RBI would steer focus towards supporting growth that is so essential for employment generation in the economy."
Industry is certainly disappointed over the increase in repo rate, he added.
"The kind of inflation we are witnessing in India is more of a supply-side phenomenon. While raising interest rates would have little impact on such inflation, it will certainly penalise Indian industry that is already in the midst of a slowdown," Singh said.
Prime Minister’s Economic Advisory Council Chairman C Rangarajan, however, differed with RBI’s inflation projection and said it will be much lower than what RBI thinks.
“I would really think as far as WPI is concerned, it will be around 5.5 to 6 per cent. I don't think that it will exceed 6 per cent. I expect the WPI as well as CPI to remain at slightly lower level than indicated," Rangarajan said.