New Delhi - Responding to the Reserve Bank of India’s third consecutive pause on policy rates keeping unchanged at 6.5%, Dr A Sakthivel, President, FIEO said that it will further help in building up on the growth momentum and containing inflation at the same time. With both US Fed and European Central Bank increasing the interest rate by a quarter percentage point, a section of trade and industry was of the view that RBI will continue to follow the same path of maintaining the status quo on policy rates front, added Dr A Sakthivel. RBI feels that the MPC decision is focused towards the objective of achieving medium-term target of consumer price index (CPI) inflation of 4 percent within a band of +/-2 percent, while supporting growth, reiterated FIEO Chief.

The decision to keep policy rate unchanged will further give boost to growth through increasing investments. While most Central banks have given more weightage to inflation as compared to growth, RBI has struck a nice balance between the two, giving primacy to growth, thereby maintaining the GDP growth forecast for FY24 at 6.5 percent.

President, FIEO said that the increasing investment will lead to further enhanced manufacturing and production thus easing supply and reducing inflation in coming months. The recovery in kharif sowing and rural incomes, along with the positive momentum in services and consumer confidence, are expected to bolster household consumption. Dr A Sakthivel also added that the status quo in rates will help exporting community, whose cost of credit has gone up substantially due to upward revision in rates during last one and half year leading to the demand to increase the interest subvention from 2% and 3% to 3% and 5% respectively.

FIEO Chief reiterated that in order to provide momentum to the external sector, the need is of the hour is to further provide extension to the Emergency Credit Line Guarantee Scheme by one more year till March 31, 2024. The resilient external sector growth backed by financial sector push will help in giving more thrust to the economy.