India better placed among top 10 economies in managing retail inflation: Assocham
New Delhi, May 22
India is better placed to manage retail inflation among the top 10 economies, according to an analysis by leading industry chamber Assocham on Friday, suggesting the RBI to maintain the repo rate status quo while introducing liquidity, interest subvention and moratorium support measures.
India's inflation stood at 3.2 per cent in February 2026 and rose to 3.5 per cent in April, a 0.3 percentage-point increase.
This performance is better than the significant increase in the US, where inflation rose from 2.4 per cent in February to 3.8 per cent in April, a 1.4 percentage-point increase.
India also performed significantly better than the inflation trajectory of France, Italy and Germany, where inflation increased by more than 1 percentage point in their respective inflation numbers between February and April. India is also better placed than Brazil in managing inflation.
"As India's headline inflation still prevails in the benign conditions, we suggest RBI to maintain a status quo on repo rate in the forthcoming review of RBI monetary policy in the 1st week of June 2026," said Nirmal K Minda, President, Assocham.
Though some increase in headline inflation can't be ruled out, given the recent rise in energy prices, "it will be a transitory phase in the inflation trajectory, and we are hopeful that inflation will return to benign territory", Minda noted.
Assocham appreciated the Central Bank's decision to conduct a $5 billion USD/INR buy-sell swap auction on May 26, to inject long-term liquidity into the banking system and strengthen forex reserves.
"This will help manage liquidity conditions and stabilise rupee volatility amid global pressures and recent currency depreciation driven by geopolitical tensions and oil price shocks," said Minda.
The industry body proposed an 'On-Tap LTRO' scheme to provide Rs 1 lakh crore in liquidity support at the Repo Rate to banks and NBFCs for lending to export-oriented and energy-related MSMEs.
It will primarily support working capital loans of up to Rs 10 crore, thereby ensuring easier access to credit and business continuity.
Assocham also proposed an interest subvention to reduce borrowing costs for MSMEs reliant on exports to the MENA and EU regions. Under the scheme, eligible units should be provided a 2 per cent interest subsidy on working capital loans of up to Rs 5 crore.
Additionally, RBI may consider a six-month loan moratorium or interest support for energy-intensive MSMEs, helping businesses manage rising costs and maintain financial stability, said the industry chamber.
— IANS
Reader Comments
As a small business owner in the export sector, I'm cautiously optimistic. The 2% interest subsidy and moratorium on working capital loans would be a lifeline for us. 😊 But I wish they'd focused more on the common man's inflation - dal, sabzi, petrol sab kuch mahanga ho raha hai! The headline numbers don't tell the full story.
Interesting comparison with the US. While 3.5% is better than 3.8%, the context matters. The US economy is much larger and has been dealing with supply chain issues differently. India's relatively lower inflation is good but we should watch core inflation closely. The $5 billion swap auction is a smart move for forex reserves.
Finally some positive economic news! 🇮🇳 But honestly, as a middle-class household, I don't feel this 'benign inflation' in my daily life. Grocery bills are up, school fees keep increasing, and now energy costs are rising. The RBI should focus on keeping rates stable while ensuring banks actually pass on benefits to common people. MSME support is great, but what about us salaried folks? 🤔
Good to see India's inflation management outperforming even developed nations. The 3.5% figure is respectable. However, I'm concerned about the proposed 'On-Tap LTRO' scheme - Rs 1 lakh crore is a massive liquidity injection. While it helps MSMEs, it could fuel inflation if not carefully targeted. The RBI needs to balance growth with price stability carefully.
This is great! India's
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