Industry unhappy with RBI decision
The Economic Times, January 28, 2009, Page 19
Our Bureau NEW DELHI
INDIA Inc has expressed disappointment over the RBI’s move to maintain key policy rates in its quarterly monetary policy review. Captains of industry and chambers have stated the central bank should have brought down rates by at least another 100 basis points to reverse the process of slowdown.
Inflation is already down to around 5%, so the reverse repo rate at which it absorbs cash from the system should be slashed to 1%,” TVS managing director Venu Srinivasan said. “Otherwise, banks will find it more profitable to park their money with RBI, rather than lend,” he added.
Industry body CII said: “Given the fact that inflation is correcting more rapidly than expected and industry and the economy as a whole is facing a slowdown, the RBI could have used this opportunity to cut key interest rates further.” The chamber said there’s still no sign of reversal in the fortunes of the manufacturing sector. “This might have an impact on employment, unless fresh measures are taken to offset the decline in domestic demand. Credit availability for the small scale sector remains a major concern,” CII added.
Ficci said RBI has held back its activism in further pruning the repo and reverse repo rates. “By RBI’s own admission, inflation is expected to moderate to 3% by March this year, this was clearly a window of opportunity.” It urged the RBI to give a further signal to banks which still remain risk-averse in lending to corporates. “Demand creation and liquidity are still an issue, and will remain so until rates are further moderated,” said Assocham president Sajjan Jindal.
The Economic Times, January 28, 2009, Page 19
Our Bureau NEW DELHI
INDIA Inc has expressed disappointment over the RBI’s move to maintain key policy rates in its quarterly monetary policy review. Captains of industry and chambers have stated the central bank should have brought down rates by at least another 100 basis points to reverse the process of slowdown.
Inflation is already down to around 5%, so the reverse repo rate at which it absorbs cash from the system should be slashed to 1%,” TVS managing director Venu Srinivasan said. “Otherwise, banks will find it more profitable to park their money with RBI, rather than lend,” he added.
Industry body CII said: “Given the fact that inflation is correcting more rapidly than expected and industry and the economy as a whole is facing a slowdown, the RBI could have used this opportunity to cut key interest rates further.” The chamber said there’s still no sign of reversal in the fortunes of the manufacturing sector. “This might have an impact on employment, unless fresh measures are taken to offset the decline in domestic demand. Credit availability for the small scale sector remains a major concern,” CII added.
Ficci said RBI has held back its activism in further pruning the repo and reverse repo rates. “By RBI’s own admission, inflation is expected to moderate to 3% by March this year, this was clearly a window of opportunity.” It urged the RBI to give a further signal to banks which still remain risk-averse in lending to corporates. “Demand creation and liquidity are still an issue, and will remain so until rates are further moderated,” said Assocham president Sajjan Jindal.
Posts
No comments:
Post a Comment