Bangalore Chamber of Industry and Commerce (BCIC) has welcomed Reserve Bank of India (RBI) repo rate cut but reiterated the need for economic revival.
H.V. Harish, Senior Vice-President, BCIC, said, “We welcome the 25 BPS cut in repo rate. The easing was expected given the recent moderation in inflation and softening of commodity prices leading to better management of fiscal deficit and current account deficit (CAD).”
With the prospect of a good monsoon, inflation is likely to ease further in the coming months but the Chamber expressed surprise over the stance of the apex bank on inflation.
Harish, said: “This is a much-needed step for industry and should spur industry to start relooking at investment which it has not done.”
As the RBI puts it, the ball is now in the court of the government to initiate reforms both at the mega level in terms of land acquisition, FDI reforms, Companies Bill, speeding up GST etc as well as even more critical to push for action on the ground in terms of simplifying processes.
N. Venkatakrishnan, Chairman, Finance and Corporate Affairs Expert Committee, BCIC said: “Global recovery is still some months away but the opportunities to drive domestic economic growth are significant and the Chamber extolled the Central and State Governments to provide a better environment for the entrepreneurial spirits to be unleashed for Indian recovery.”
The Chamber feels that as such the scope for RBI to cut rates further is contingent to some of these steps which may be undertaken by the government.
The inflation is likely to move around comfortable trajectory given the outlook on commodities and given the continued deceleration in growth momentum. The RBI has highlighted very limited space and the inference is utmost another 25 basis points and we are unlikely to see rate cuts beyond that.
Overall the Chamber feels that the moderation in inflation can actually have further positive impact on giving the Central Bank some leeway in terms of policy rates which should augur well for the industry and the economy in the short term.
anil.u@thehindu.co.in