CII's Chandrajit Banerjee says RBI should have announced cut in policy rates
Commenting on the first bimonthly monetary policy statement released today, Chandrajit Banerjee, Director General, CII noted that the RBI, in a quest towards maintaining a fine balance between growth and inflation, has announced a status quo in policy rates which is as per market expectations.
Banerjee said that at the time when growth impulses remain weak and WPI inflation has been on the declining trajectory for the last nine months, the RBI should have taken this opportunity to announce a cut in policy rates which would stimulate demand and kick start the investment cycle.
He said that this is especially the case as deposit growth has outpaced growth in credit indicating that high cost of credit is dissuading industry from building additional capacity.
Banerjee raised concern over the pressure on imported inflation would also diminish due to slowing of Chinese economy and softening of global commodity prices, saying that all this should have encouraged the RBI to effect a cut in policy rates.
He added that in such a scenario, an impetus to growth should have been a priority.
(Posted on 01-04-2014)