Confederation of Indian Industry (CII) Director General Chandrajit Banerjee on Tuesday said the Reserve Bank of India (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.
Commenting on the first bimonthly monetary policy statement released by the RBI earlier today, Banerjee said, "However, at a 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."
"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," he added.
He also said that the pressure on imported inflation would also diminish due to slowing of Chinese economy and softening of global commodity prices.
"All this should have encouraged the RBI to effect a cut in policy rates. In such a scenario, an impetus to growth should have been a priority," he said.