By maintaining a status quo on the policy rates, the Reserve Bank of India has defied a widespread expectation of at least a 25 basis points cut in the interest rates, but the industry and the trade expected a little more clarity from the central bank on the time line for the demonetisation disruption to end, said ASSOCHAM.
"The underlying message is that the things at this stage seem to be in a state of flux even as the RBI itself has revised downward the estimates of the GVA by 50 basis points. How the demonetization would play out for growth, lending rates or even inflation is not clear and the RBI makes no bones about it," said the ASSOCHAM President Sunil Kanoria
However, the central bank describes it as transient.
In any case, a cut in interest rate would not have made much of difference to the credit off-take in the midst of the industry being over-leveraged and the consumer demand remaining tepid because of scrapping of the high value currency notes. Besides, the RBI has sounded a word of caution when it comes to the inflationary outlook even as it hopes to stick to the target of 5 per cent CPI inflation by the end of fourth quarter of 2016-17.
"It is apparent that all energies are being utilized to deal with the demonetization issue and things can get clearer only after normalcy is restored by way of remonetisation of the currency for the trade and industry to get back to shape," the chamber said, adding that it shares RBI and the government's views about the urgency to deal with the menace of black money and counterfeit.
The chamber has urged the RBI to keep a close eye on the rupee rate, outflows from the capital market and the developments in the United States.
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