Sep 17, 2010
Reacting to RBI’s policy moves, FICCI Secretary General Amit Mitra said “while the heart of RBI is in the right place, with clearly stated intention to control inflation without disrupting growth, the policy action taken today raises concern about the likely direction of growth trajectory.”
“The increase in the reverse repo rate by 50 basis points is tantamount to incentivizing banks to put more money in RBI’s coffers as against lending more to potential investors. This is not a growth related signal and will deter investments at the margin. The increase in repo rate by 25 basis points is again a signal to banks to raise the cost of borrowing”, he added. “FICCI feels that these twin moves are not quite consistent with the spirit of not disrupting growth… These moves are perhaps a little harsh given the spirit and letter of RBI own perspective of not disrupting growth parameters,” he said and added, “We urge that business confidence which has been adversely hit today will be encouraged by reversing this restrictive policy in the next round.”
