Business Standard

RBI's priority remains inflation: India Inc

BS Reporter Mumbai
The Reserve Bank of India keeping interest rates unchanged in its monetary policy review on Tuesday, chief executives said it was trying its best to keep a lid on prices.

The extra Rs 40,000 crore liquidity to be released into the banking system by a lower statutory liquidity ratio would help companies in the festival season when consumer credit picks up.

"The RBI has pushed forward with monetary policy changes that encourage investment. It is a good move," said Kiran Mazumdar Shaw, chairperson and managing director of Biocon.

"The credit policy is without any exuberance as was expected. The RBI has no option but to hold rates till Inflation is fully under control. Once inflation is under control, the RBI, in its own words, will not hesitate to relax the repo rates," said Prabal Banerjee, president of international finance at the Essar group.
 
Corporate leaders said the RBI was trying to support growth through extra money supply, which was why the statutory liquidity ratio was being moderated in every policy. They added the central bank had tried to manage market expectations with a renewed focus on 6 per cent economic growth.

"We hope the liquidity measures will help the forthcoming festival demand for credit and if more is required, hopefully the RBI will respond positively. The RBI has given flexibility to banks and improved the supply side. Whether this bank-to-bank input will translate into a bank-to-consumer output remains to be seen," said V S Parthasarathy, chief financial officer of  Mahindra & Mahindra

While near-term risks from the monsoon, growth pick-up and global commodity prices remain, the RBI expressed greater confidence of achieving the 8 per cent consumer price index growth target by January next year.

"At a time when industrial growth continues to be sluggish and inflation risks are abating due to an improvement in the monsoon, the RBI could have effected a cut in interest rates," said Chandrajit Banerjee, director-general of the Confederation of Indian Industry.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Aug 06 2014 | 12:48 AM IST

Explore News