Reserve Bank’s continued pause on interest rate bodes well for India Inc, say experts

Mumbai: The Reserve Bank’s continued pause on the short-term lending rate at 6.5 per cent fares well for corporate India as the economic growth is estimated to clock a higher growth of 7 per cent this financial year, said experts.

The RBI expectedly left its key lending rates unchanged for the fifth consecutive time and predicted faster growth in the world’s fastest-growing major economy amid an uncertain outlook on inflation ahead of elections.

The Reserve Bank also raised its estimate for the GDP growth to 7 per cent for the fiscal from its earlier projection of 6.5 per cent.

Industry body Assocham said the Reserve Bank’s continuing focus on disinflationary monetary policy retaining repo rate unchanged at 6.50 per cent is well-aligned with the intention of the Monetary Policy Committee (MPC) for an ecosystem favourable to a sustainable growth, which promises to be robust braving global headwinds.

“While inflation has been declining for the past few months, the RBI seems resolute in its target of taming it to its target of four per cent. It has so far kept a vigil eye on both global and domestic events for a stance that would bring more confidence to investors, borrowers and consumers as the focus of the credit policy remains on price and financial stability,” Assocham Secretary General Deepak

Sood said.

Anu Aggarwal, President and Head Corporate Banking at Kotak Mahindra Bank, said that the government’s sustained efforts in driving an investment push in India, healthy corporate profits, and a reduction in banks’ non-performing loans will keep investment buoyant despite elevated input costs.

“We also expect India’s exports to perform well, propelled by performance in services exports. Fighting rising oil prices and inflation remains an ongoing concern due to several factors globally. However, the prolonged pause on repo rates will fare well for corporate India,” Aggarwal said.

Chairman of CII Delhi State Council and MD & CEO of Samtel Avionics Puneet Kaura opined that the RBI’s decision to maintain interest rates bodes well for the Indian economy, which is experiencing robust growth.