Commenting on the monetary policy statement announced by RBI, Mr Sandip Somany, President, FICCI said, "With benign inflationary conditions and weakening economic growth, industry had expected an accommodative stance from RBI and today's 25 bps cut in repo rate is a welcome move. We further hope that this third consecutive rate cut in repo rate will lead to effective transmission, encouraging banks to lower their lending rates for both retail and corporate credit. As of date, transmission has remained weak and ineffective largely due to tight liquidity conditions."
"Reviving business confidence, consumer confidence and triggering animal spirits in the economy is the need of the hour. Given that real interest rates in India are amongst the highest in the world, there is room for further reduction in repo rate. At the same time the RBI may also consider lowering the reverse repo rate to improve liquidity. Going forward, while RBI should continue the accommodative stance in coming months, the new Government should present a progressive Union Budget that would help revive consumption and encourage greater private investments," added Mr. Somany
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