Corporate India was left unimpressed with the RBI decision to keep the rates unchanged.
Ajay S Shriram, President, CII stated that the decision of the RBI to keep key policy rates unchanged reflects a very cautious approach towards monetary easing to anchor inflationary expectations.
"CII is of the view that a cut in policy rates even by a modest 25bps by front-loading of monetary easing cycle would have been a mood elevator and propelled industry and consumers to augment demand. This is especially required to provide a fillip to growth in the employment-intensive auto, consumer durables and housing industry," the apex industry body said.
"Many stalled projects are waiting for availability of credit at cost effective rates to restart the operations and eventually be a trigger for a turn in the investment cycle. These projects could be revived if RBI and banks had cut interest rates," it added.
Shriram stated that at a time when a drastic decline in crude oil and commodity prices has helped to partially offset the major stress points in the economy namely inflation and twin deficits, there is enough space for RBI to cut rates even while delivering on the inflation mandate.
"We also hope that the banks would transmit the rate cut onwards so that credit is disbursed to productive sectors of the economy. CII is looking to see a 100 bps reduction in headline rates in the course of the year," it added.
EEPC India said that while the RBI has appreciated ‘ fragile external demand conditions’ and ‘ progressive weakening ‘ of export performance, it has done precious little for reducing the interest costs for Indian exporters who have to compete against highly aggressive suppliers from China and other exporting countries. Anupam Shah, Chairman of the EEPC India, engineering exporters’ apex organisation said, "RBI has also taken note of the stronger rupee in real effective terms taking toll on exporters’ margins. Thus, the RBI Monetary policy has been a dampener for the exporters."