Reserve Bank of India recently announced the bi-monthly monetary policy.
RBI governor Shaktikanta Das addressed the bi-monthly monetary policy committee statement on August 6. In a bid to remain in “whatever it takes” mode to revive growth, the apex monetary institution has decided to keep the GDP growth forecast unchanged at 9.5 per cent for the current financial year.
Industry leaders from different sectors responded in favour of the apex bank’s decision.
CH S S Mallikarjuna Rao, MD & CEO at PNB said: “The RBI has rightly prioritized growth over inflation to rejuvenate economic growth on a durable basis and mitigate the extraordinary impact of COVID-19. The decision of keeping the repo rate unchanged along with maintenance of accommodative stance is on expected lines as low interest rates are critical to economic revival.”
He also mentioned: “Additional, liquidity measures through extension of deadline of on-tap TLTRO scheme till December 31, 2020 will have positive implications for stressed sectors like retail, MSME and real estate. Amendment of guidelines related to export credit in foreign currency and restructuring of derivative contracts is a much-needed move to ensure smooth transition from LIBOR and meeting the incipient challenges. Deferral for achievement of financial parameters under Resolution framework 2.0 will address the revival difficulties faced by the businesses in meeting the operational parameters.”
“Attributing inflation risks to temporary supply shocks, MPC has also indicated that it will anchor inflation expectations as soon as strong and sustainable growth is assured,” Rao added.
Kamal Khetan, CMD at Sunteck Realty, said: “The Reserve Bank’s accommodative stance is ideal to sustain a broader economic recovery. While the optimism about a steady economic recovery is gladdening, we believe that the recovery may need some more room from a good monetary-fiscal policy combination. The real estate industry is making recovery across many markets. With home loans still remaining at bottom levels, we believe the buying activity will soon be accelerated by those who have not used this favourable scenario to their advantage yet.”
Sameer Narang, chief economist at Bank of Baroda said: “MPC maintained status quo on rates. While growth forecast was retained, inflation forecast has been increased to 5.7% (5.1% earlier). This perhaps explains 5:1 vote on continuation of accommodative stance as long as necessary to revive growth on a durable basis. Commentary on growth is far more positive than last policy. Rural consumption, government spending, exports and investments are looking up. RBI’s growth forecast for Q1FY23 is 17.2%. This sets the base for normalisation of policy.”