Hopes crushed, India Inc angry

 Corporate India expressed its great disappointment over RBI’s stance of not making any change in interest rates or cash reserve ratio (CRR) to easy liquidity.

They were hoping for a rate cut to boost industrial growth and also for taking economy to a higher trajectory.

In fact, India Inc slammed RBI’s ‘inflation-centric policy’ to keep interest rates unchanged, saying the central bank has missed the bigger picture.

“It needs to be understood that with a steadily declining GDP growth, millions of livelihoods are under threat and therefore, a very inflation-centric policy measure appears to have missed the bigger picture,” CII Director General Chandrajit Banerjee said.

In a scathing attack on the RBI, Ficci said: “The RBI decision to not reduce the repo rate is even more difficult to understand in light of its own admission that ‘growth slowdown points to serious supply bottlenecks and sticky inflation expectations’.”

It is not clear at all how the supply bottlenecks and high level of vegetables and protein prices, which is the main cause of persistent inflation, will be tackled by keeping interest rates high, Ficci added.

Due to lack of reforms, coupled with continued a high interest rate policy by the RBI, the economy is headed for a long period of ‘slowflation’ which will bring us closer to a major crisis, the chamber added.

“Therefore, a cut in the repo rate would have been very timely and may have provided some boost to the already flagging growth,” Ficci Secretary General Rajiv Kumar said.

Similarly, Assocham President Rajkumar Dhoot said, “A cut in the policy rates could have given some boost to the industrial sector and helped the economy regain the growth momentum.”

The banking industry was also unhappy.