Monday, 15 January 2018

India Inc. asks rate cut

By Shivam Saklani

India Inc. (a common term used by the Indian media to refer to the formal sector (comprising government and corporate) of the nation) today requested the Reserve Bank of India to reduce key policy rates to support investments and boost economic growth.
As per the government data released today, inflation on food articles slowed to 4.72 percent in December, from 6.06 percent in November 2017.Inflation based on wholesale prices eased to 3.58 percent in December 2017 as prices of food articles declined even as fuel cost witnessed a surge.

This was considered a reason behind the strong demand of India Inc. for policy rates reduction. “The policymakers need to take care of the continuous rise in petrol and high speed diesels prices due to rise in global crude oil prices, which already is showing an impact on import bills as well as the exchange rates of the country”, said Assocham Secretary General D S Rawat.
On the other hand, data released last week showed that retail inflation breached the RBI’s comfort level to touch 5.21 percent in December; The RBI takes into account retail inflation while deciding on key policy rates. In its last policy review in December, RBI had kept key repo rate unchanged at 6 percent and reverse repo rate at 5.75 percent.

“Lowering the repo rate in the upcoming monetary policy is critical to boost investments and build the growth momentum” FICCI President Rakesh Shah said.
Union Budget is expected to provide details on more specific measures towards strengthening of agriculture sector at the same time; it would be an opportunity to include petrol and diesel in GST, which would help in lowering the pressures of fuel inflation.

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