India Inc expresses disappointment over RBI's policy status quo

India Inc continues to remain over-leveraged while consumer demand is still subdued. Representational photo: Image source: Pixabay

India Inc today expressed disappointment over RBI's decision to hold fire, saying there is a need to revive domestic demand and encourage investment through lower cost of capital to crank up growth.

"We are hopeful that going forward the RBI would shift its policy stance from neutral to accommodative and effect a cut in interest rates to revive domestic demand, which would provide a fillip to broad-based investment activity that has yet to take off in a big way," said CII Director General Chandrajit Banerjee.

He observed that a reduction in interest rates would give the necessary signal that fiscal and monetary policies are working in tandem to give a boost to growth.

"While inflation weighed on the decision of the Monetary Policy Committee of the RBI, the growth concerns cannot be brushed aside either, as the cost of capital is still high in India," Assocham President Sandeep Jajodia said.

India Inc, he said, continues to remain over-leveraged while consumer demand is still subdued.

The Reserve Bank decided to hold the policy rate, on expected lines, but raised inflation forecast for the remainder of 2017-18 to 4.3-4.7 per cent.

The 6-member Monetary Policy Committee (MPC), headed by Reserve Bank of India Governor Urjit Patel, in its fifth bi- monthly review of this fiscal, kept repo rate unchanged at 6 per cent and reverse repo at 5.75 per cent.

The RBI could have joined the government in helping the exporters by reducing the cost of borrowing, said EEPC India Chairman T S Bhasin.

The central bank retained economic growth forecast at 6.7 per cent for the fiscal to March.

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