RBI's Strategic Decisions for Enhanced Growth and Inflation Balance: Industry Associations
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New Delhi, Dec 6 (NationPress) Prominent industry associations expressed their approval of the RBI's decisions concerning the repo and cash reserve ratio (CRR) rates, asserting that these actions will foster a more effective balance between growth and inflation management.
They commended the measured steps taken by the central bank during its three-day Monetary Policy Committee (MPC) meeting, including a notable reduction of the CRR from 4.5 percent to 4 percent.
"This will not only enhance liquidity in the economy but also uplift business sentiments as it indicates a potential softening of interest rates in the future," remarked PHDCCI President Hemant Jain.
The MPC also resolved to maintain the repo rate at 6.5 percent while continuing to align inflation with targets to support growth, as India is positioned to leverage emerging trends.
According to Confederation of Indian Industry (CII) Director General Chandrajit Banerjee, the 50-bps cut in CRR will facilitate the availability of additional resources across all productive sectors of the economy, particularly in anticipation of a tightening of systemic liquidity.
"This was a specific request from CII, along with a call for moderation in headline interest rates. We are pleased with the maintained neutral stance and the anticipated easing of inflation, which could lead to rate cuts in the near future," Banerjee added.
Moreover, increasing the collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh will significantly enhance credit flow to the agriculture sector, thus providing a strong boost to the rural economy, according to the leading industry chamber.
"Our forex reserves remain robust. The hike in interest rate ceilings on FCNR (B) rates by 200 basis points is a commendable move that will likely further augment forex reserves through inflows from the Indian diaspora," Banerjee remarked.
The RBI's announcement about launching a new Secured Overnight Rupee Rate (SORR) aims to establish a new interest rate derivative market.
"This initiative will enhance transparency and bolster the credibility of interest rate benchmarks. Additionally, this measure will strengthen the trust of global investors in the Indian financial system," stated the CII Director General.
The initiatives of setting up a committee of experts to propose a framework for responsible and ethical AI use and the establishment of an RBI podcast are also expected to safeguard customer interests in the financial sector, as noted by industry chambers.
"We remain optimistic that the economy will regain its high growth trajectory in the upcoming quarters," Jain concluded.
