ASSOCHAM Appeals to RBI for Steady Rates in Upcoming MPC Meeting
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Synopsis
ASSOCHAM has advised the RBI to maintain a steady rate during the upcoming MPC meeting, emphasizing the need for careful assessment of previous liquidity measures before making further adjustments.
Key Takeaways
- ASSOCHAM urges RBI for a cautious approach.
- Recommends maintaining rates instead of cutting.
- Focus on assessing current liquidity measures' impact.
- Predicted GDP growth of 6.7% for FY’26.
- Retail inflation expected to remain under control.
New Delhi, April 2 (NationPress) As the Reserve Bank of India (RBI) gears up for its scheduled monetary policy meeting from April 7 to 9, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) urged a prudent approach on Wednesday. They recommended that the RBI maintain a "wait and watch" policy instead of proceeding with an immediate rate reduction.
ASSOCHAM President Sanjay Nayar stressed that the central bank had already provided liquidity to the market through initiatives such as a 25-basis-point cut during the last policy cycle, and it is crucial to allow time for these measures to manifest their impact.
"The RBI has recently introduced liquidity into the market through various initiatives, including a 25 basis points reduction last time," he stated.
Nayar argued that attention should be directed towards evaluating the ramifications of these actions on capital expenditure (capex) growth and consumer spending before any further decisions are taken.
"In this context, we believe that the RBI is likely to keep rates unchanged during this policy cycle. A rate cut at this juncture may exert pressure on the rupee, despite its potential to increase consumer borrowing," he noted.
Nayar highlighted that while external challenges continue to loom, India’s economy remains robust and is projected to grow steadily in the upcoming fiscal year.
The leading industry chamber is optimistic about India’s GDP growth, anticipating a rate of approximately 6.7 percent for FY’26.
The industry body also predicts that retail inflation will stay manageable, aided by favorable trends in global crude prices and the reduction of geopolitical tensions.
"The preceding actions by the RBI, including liquidity measures and rate reductions, aimed to stimulate demand across various sectors of the economy," Nayar added.
While such measures can benefit sectors like housing, automobile, and consumer durables, he advised that the central bank should closely observe the broader economic landscape before implementing further cuts.
Despite global pressures, such as volatile crude oil prices and geopolitical uncertainties, ASSOCHAM expressed confidence in India’s resilience.
The organization believes that a balanced approach to fiscal and monetary policies will sustain stability and promote growth in the forthcoming months.
