What an unpleasant surprise for India Inc!
21 Sep 2013 10:23 PM GMT
Expressing disappointment over the hike in repo rate by the RBI, India Inc on Friday said a rate cut by the bank would have helped ameliorate sentiments as businesses are 'reeling' under a tight liquidity crunch due to high cost of capital.
'High interest rate has been identified as a major barrier to boosting growth. The increase in the repo rate has come as a surprise to us. While industry is disappointed, reduction of interest rates charged and availability of credit remain a plea and we are confident RBI will keep this in their sights going forward,' Ficci President Naina Lal Kidwai said.
'The increase in repo rate could have been avoided as industry is already reeling under pressures of high cost of capital and low availability in a tight liquidity situation.
Industry would have liked reduction in headline rates,' CII director general Chandrajit Banerjee said.
The repo rate or the short term lending rate has been increased by 25 basis points to 7.5 per cent from 7.25 per cent with immediate effect.
'Contrary to expectations, the RBI has chosen to further tighten the monetary stance giving a clear signal that fighting inflation is its core priority. RBI Governor Raghuram Rajan has acted in a cautious manner, the financial markets were perhaps expecting too much from him,' Assocham President Rana Kapoor said.
'The reduction in MSF by 75 bps is encouraging as this is working as the short term interest rate,' Banerjee said.
'The RBI has admitted that industrial activity continues to remain sluggish and even consumption demand is now starting to weaken in the economy. In such a scenario, a positive signal by way of a cut in the repo rate would have helped perk up sentiments,'
added Kidwai.
'High interest rate has been identified as a major barrier to boosting growth. The increase in the repo rate has come as a surprise to us. While industry is disappointed, reduction of interest rates charged and availability of credit remain a plea and we are confident RBI will keep this in their sights going forward,' Ficci President Naina Lal Kidwai said.
'The increase in repo rate could have been avoided as industry is already reeling under pressures of high cost of capital and low availability in a tight liquidity situation.
Industry would have liked reduction in headline rates,' CII director general Chandrajit Banerjee said.
The repo rate or the short term lending rate has been increased by 25 basis points to 7.5 per cent from 7.25 per cent with immediate effect.
'Contrary to expectations, the RBI has chosen to further tighten the monetary stance giving a clear signal that fighting inflation is its core priority. RBI Governor Raghuram Rajan has acted in a cautious manner, the financial markets were perhaps expecting too much from him,' Assocham President Rana Kapoor said.
'The reduction in MSF by 75 bps is encouraging as this is working as the short term interest rate,' Banerjee said.
'The RBI has admitted that industrial activity continues to remain sluggish and even consumption demand is now starting to weaken in the economy. In such a scenario, a positive signal by way of a cut in the repo rate would have helped perk up sentiments,'
added Kidwai.
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