The decision of Reserve Bank of India (RBI) to keep the key policy rates unchanged is 'harsh and disappointing,' apex industry body ASSOCHAM said while reacting on the central bank's mid-quarter monetary policy review.
"Our hopes of seeking some relief are dashed as the apex bank has yet again given away the opportunity to help reverse the business sentiments and see investments taking place," said Mr Rajkumar Dhoot, president of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
"Regrettably, the RBI has even over looked the stubble message given by the government seeking interest rates policy support for revival of the growth which has touched decade low," said the ASSOCHAM chief. "This move will definitely slow down the industrial growth further."
"Considering that policies of titling interest rates at the cost of growth have not paid any dividend, it is high time that the central bank re-drifts the policy stamps," said Mr Dhoot. "The RBI and the policy makers must consider that inflation in India is a supply side phenomenon and can be addressed effectively by increasing the supply of goods and services and in this backdrop, the present outcome of monetary policy review has left the industry concerns unaddressed."
"The government must reduce the cost of credit while initating other policy measures to revive the growth," said Mr Dhoot.
On the basis of the current macroeconomic assessment, RBI has been decided to:
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.25% of their net demand and time liabilities; and
keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) and the Bank Rate at 9.0 per cent.