The PHD Chamber of Commerce and Industry (PHDCCI) President Alok B Shriram has expressed his disappointment on status quo maintained by RBI on repo rate as he said the pressure of high interest rates is impacting industry and investment environment.
The PHDCCI was expecting 50 basis points cut in the repo rate in Third Bi-monthly Monetary Policy Statement for 2015-16, he said.
Repo rate under the liquidity adjustment facility (lAF) has been kept unchanged at 7.25%, cash reserve ratio (CRR) of scheduled banks kept unchanged at 4%, reverse repo rate under the lAF unchanged at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 8.25% .
Industrial growth (IIP) is merely growing at a rate of 3% in April-May 2015-16 and the growth of consumer durables is in the negative trajectory at (-1.4%) during the same period due to the sluggish demand scenario across the urban and rural segments.
Therefore, an aggressive move to cut repo rate is needed at this juncture to facilitate industry to grow in double digits to achieve the desired objectives of Make in India, he said.
It will further help to refuel demand scenario and sentiment for investments to strengthen and grow in the coming times, Shriram said.
Repo rate must not be more than 6% to induce demand and refuel industry growth at this juncture, he said
Decline in WPI inflation and international commodity prices coupled with reforms at domestic front have created room for easing monetary policy stance, he said
Therefore, at this juncture, calibrated policy stance is required for inducing demand scenario and boosting industrial growth to pave the way for higher economic growth.