IGI Logo

Industry body -- the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said that the Reserve Bank of India (RBI) should continue with an accommodative interest rate stance as long as necessary to sustain and further push the pace of economic growth. It said that while concerns over inflation, especially in the Wholesale Price Index (WPI), need to be addressed, measures other than reversal of the accommodative stance should be encouraged.

It said ‘The RBI and its Monetary Policy Committee (MPC) have done a commendable job to retain the present policy rates’. However, central banks in some of the developed economies are moving towards tapering the accommodative policies. The chamber said ‘We are sure and as we have been maintaining that the RBI would not follow this template and continue with the low interest rates’.

It also said the global initiative by the crude oil-importing and major consuming nations, including the US and India, should lead to a rise in global supplies and soften prices. It added ‘It is true that banks are flush with liquidity but the credit demand is yet to pick up especially for private investment. We see this too happening but any reversal of the accommodative interest rate stance may dampen faster revival in investment’.