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The Confederation of Indian Industry (CII) on Thursday hailed the RBI move to cut repo rate by 25 basis points, describing it as a positive surprise in new year.
This would be a huge mood lifter for investors who have been grappling with subdued demand conditions, the CII Director-General, Chandrajit Banerjee, said in a statement.
Investment demand
CII feels the 25 basis points rate cut -- although symbolic -- would send a strong signal down the line that both the Government and the Reserve Bank of India (RBI ) are acting in concert to harness demand and take the economy to higher growth path.
A rate cut would propel investment demand and spur spending in rate-sensitive consumer durables and give fillip to construction activity, Banerjee said.
Going forward, CII hopes that while maintaining a delicate balance between growth and inflation, RBI would shift its stance in favour of growth, given that the trend in inflation is clearly subdued.
CII has called for further cut in policy rates by at least 25 basis points in the forthcoming monetary policy in February.
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