The Bangalore Chamber of Industry and Commerce said it was disappointed that the Reserve Bank left key interest rates unchanged despite a high expectation from the street.

Corporate India desperately needed a lower interest rate to revive the flat growth, it said.

The Chamber said, “RBI’s decision to keep rates unchanged clearly shows the growing concern on the persistently sticky inflationary pressures even as growth momentum slows down. We expect RBI to carefully monitor the growth-inflation dynamics going forward to change its policy stance.”

H V Harish, senior vice-president, BCIC, said, “We believe reduction of interest rates will bring back growth, ease supply-side constraints and bring down inflation. This will also have political consensus unlike some of the other reform initiatives.”

He added, “We are disappointed with the decision of RBI to keep interest rates unchanged which is contrary to most global policies and the BRIC economies [that] have been following an easy policy and low interest rates. In the absence of policy initiatives to boost growth and the weak agricultural outlook for the year, this was one measure to boost growth. The current policy stance [] is on the basis that keeping interest rates high has resulted in lowering of economic growth and more critically delaying investment - a result of which is seen in the blackouts in north and east India - but has not been able to contain inflation.”

The UPA government, according to the Chamber, should take urgent steps to check the economic slowdown and boost investor confidence.

(This article was published on July 31, 2012)
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