New Delhi: The industry has appreciated the Reserve Bank of India’s policy rate repo continuation. They says that this will increase trust between companies and customers. Significantly, the Reserve Bank has taken a soft stance on monetary policy. It did not change the key policy rate repo and maintained the record low at 4 per cent.
Industry appreciated the initiative of the Reserve Bank
The economy has not yet fully recovered from the Covid-19 crisis. In this context, the RBI preferred economic growth over inflation. Industry body PHD Chamber of Commerce (PHDCCI) President Sanjay Agarwal said the central bank has maintained status quo despite high inflation in case of some products.
Aggarwal said, “Amidst the impact of Covid-19, bringing and maintaining economic growth on track will increase the confidence between companies and customers. It is encouraging that the RBI has retained the GDP (Gross Domestic Product) growth forecast for the financial year 2021-22 at 9.5 per cent, despite tough times due to the pandemic.
He said, “We request the banks to pass on the benefit of the reduction in the repo rate during the last financial year to the industry, businessmen and customers. This will give impetus to demand and accelerate economic growth.” Industry body Assocham said that the RBI should get full credit for prioritizing growth and easing of monetary policy.
Central bank retains policy rate repo
Inflation is expected to moderate from the third quarter of the current financial year. The reason for this is that by that time all the bottlenecks related to supply will be removed. At the same time, the monsoon is progressing at a good pace. This will have a positive impact on food inflation. According to the industry body, by keeping the policy rate repo at a minimum of 4 percent, the RBI and the government have made it clear that they are working together to give momentum to the economy.
FICCI said that at a time when monetary policy was expected to return to the normal course, the decision of the RBI is a relief. The industry body said that under the Resolution Framework-I announced last year, the extension of the deadline by six months to meet the requirements of financial norms will bring relief to the stressed companies. According to FICCI, however, given the manner in which the COVID situation has emerged, some of the more stressed sectors may require a longer period to meet the financial norms.