Bharatiya Janata Party (BJP) leader Balbir Punj on Tuesday said there is absolutely no decision-making under the Congress-led UPA Government's rule, and added that as a result, the Indian economy is in reverse gear.
"The RBI is a part of a system, it doesn't run the economy. The economy is run by the Government of India and the Finance Ministry. And the way there has been a policy paralysis for the last 10 years, and the way massive scandals have taken place, and there is absolutely no decision-making. As a result, the economy is in reverse gear," said Punj.
"And, at one point of time, when the NDA left this government the growth rate was 8.4 percent and it is dropping to less than four percent. It only underlines the ugly reality that the way this government has flopped everywhere, it is flopping even on the economic front," he added.
The Reserve Bank of India (RBI) earlier in the day hiked the short-term lending (repo) rate by 0.25 percent to 7.75 percent.
This move of the central bank will make corporate and consumer loans more expensive.
RBI Governor Raghuram Rajan brought down the cost of short-term funds for banks by slashing the marginal standing facility (MSF) rate by a similar quantum to 8.75 percent.
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Rajan said the policy stance and measures are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth.
"These will help strengthen the environment for growth by fostering macroeconomic and financial stability. The Reserve Bank will closely monitor inflation risk while being mindful of the evolving growth dynamics," he said.
The RBI reduced the growth forecast for the current fiscal to 5 percent from 5.5 percent projected earlier.
The central bank left other rates unchanged, such as the Cash Reserve Ratio (CRR) at 4 percent, and Mandatory holdings in government securities and other liquid assets as a solvency measure (SLR) at 23 percent.