Mangaluru, Oct 5,2017: The Reserve Bank should have taken a bold move and cut the policy interest to boost growth as the inflation level is still well within control , said ASSOCHAM President Sandeep Jajodia.
"RBI is always faced with dilemma of choosing between growth and inflation, but overall national sentiment at this point of time, is for reviving growth and employment as the trade and industrial activity, particularly in the informal sector, is facing some disruption from the GST.
The window of easing interest rates was very much open, which has not been used by the RBI".
Sandeep said RBI has taken note of the pressure on economic growth and revised downward the prospects of GVA to 6.7% for the current fiscal from earlier projections of 7.3%. As the inflation is concerned, the outlook is likely to go benign after a month or so , once the winter arrival of food products , particularly vegetables and fruits, is in place. The RBI policy document itself highlights that the assessment of food prices going forward is largely favourable.
"What is not so pleasant is the fact that the credit policy does not give any indication of a rate cut even in the short to medium term, so the ball for growth revival is now completely in the court of the government through fiscal measures. The ASSOCHAM would urge the states to follow the Centre’s move to cut the excise on petrol and diesel and reduce VAT, so that the cascading impact is minimized in face of hardening of crude prices in the global market", Jajodia said.
Expressing concern over the precarious situation that the manufacturing sector is in, he said, "As profoundly highlighted by the RBI itself, the manufacturing sector at 1.2% witnessed the lowest growth in the last 20 quarters; this must reverse with the monetary and fiscal measures. Or else, it would be difficult for the industry to generate jobs".
Sandeep however supported the RBI Governor Urjit Patel