India Inc Expresses Disappointment At RBI’s Decision To Keep Repo Rate Unchanged

Indian chief executive officers (CEOs) have expressed disappointment at the Reserve Bank of India’s (RBI) decision to maintain status quo on the interest rate during its review of the monetary policy. The RBI had today kept interest rate unchanged at 7.75%.
According to CEOs, corporates will not be willing to take loans for new projects at such a high rate.

"The Indian corporates were expecting a rate cut in view of sustained low CPI, WPI and food inflation coupled with benign oil prices in global market helping a positive CAD (current account deficit). In my opinion, this was possibly the best time to have a rate cut and give a real impetus to the growth, which is yet to take off in Indian economy as of today," said Prabal Banerjee, president (international finance) of Essar group.

"The RBI has taken a very positive step towards liquidity infusion by reducing SLR by 50 BP, but that liquidity may be difficult to avail of by everyone and give a real push to growth and economy unless it is associated with moderate cost. We look forward to more positive surprises from RBI as it happened in January," he added.

Dinesh Thakkar, chairman and managing director of Angel Broking, said, "The RBI has kept key policy rate unchanged, as it had recently cut rates by 25 basis points in Jan 2015 and indicated that it will wait for more economic data and the budget to come out for further policy action. In my view, the ongoing fall in inflation is structural and sustainable and if the government also delivers on fiscal consolidation as expected, there is likely to be further easing by the RBI post the budget.”

When the RBI had cut the rates by 25 basis points last month, corporate leaders had welcomed the move, and had also demanded more rate cuts.