 "CII, Ficci give thumbs up to Raghuram Rajan's Santa act")
Industry has given a thumbs up to Raghuram Rajan’s santa act. Both, the Confederation of Indian Industries and Federation of Indian Chambers of Commerce and Industry, welcomed the RBI Governor’s decision to hold back an interest rate increase.
Ficci President Naina Lal Kidwai said RBI’s decision to keep the repo rate unchanged after two successive increases comes as a welcome breather.
She said Government should focus on helping growth as a discernible slowdown has been witnessed in the services sector now. “At this juncture we certainly need to push all buttons to safeguard growth and revive investor sentiment,“Kidwai said in a statement.
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HSBC country head Naina Lal Kidwai. Reuters[/caption]
CII said a good agricultural performance will anyway ensure that prices of food items moderate soon. And with the rupee having stabilized, fuel prices would also not see any sudden increase either.
“To some extent that obviates the need for further monetary tightening. Therefore, the RBI has demonstrated restraint and foresight to strike the right balance between inflation and growth,” it said in a statement.
Kidwai of Ficci said keeping interest rates in check will also support the equity markets at a time when, “we need disinvestments to accelerate to help achieve a fiscal deficit of 4.8%”
CII has maintained that the current spike in inflation is a supply side phenomenon and therefore, a tight monetary policy would hurt growth while proving unequal to the task of tackling inflation.