The Hindu Business Line : Mixed reaction from industry to RBI's credit policy review

NEW DELHI: India Inc sung in different tunes-- from outright disappointment to "understanding'' focus on price stability -- while reacting to the RBI's decision on Tuesday to keep the key rates unchanged.

Belying expectations of a softer interest rate regime, the RBI in its third quarter review of monetary policy kept banks rate, repo rate, reverse repo rate and cash reserve ratio unchanged in a bid to maintain financial and price stability.

The Confederation of Indian Industry said the focus on keeping inflation under control was "understandable'', while Assocham and exporters' body FIEO expressed disappointment over status quo in bank rate. They said easing the monetary policy would have i nfused growth momentum in the sectors showing signs of sluggishness.

"There is an underlying focus on stability, which is conservative. In uncertain times, this is strategically a good stance, as long as the RBI explicitly makes it known that it can take any action pertaining to key rates if the situation demands,'' CII s aid in a statement. However, Assocham expressed its displeasure over "indifference'' by the central bank which left most of the key parameters like bank rate, cash reserve ratio, repo and reverse repo unchanged.

"We fear that the continued policy indifference may compel the industry to postpone its investment plans in expectation of demand slowdown," Assocham President Venugopal Dhoot said. He said the restraint shown by the RBI would make it difficult for some industry segments to cope with the slackening demand, rising imports and high borrowing cost. He said the overall policy stance was to maintain price stability. Echoing similar disappointment, another industry body FICCI said that with the slowdown in i ndustrial growth, the RBI could have done some rethinking on the interest rate regime and "finetuned the rates''. - PTI

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