Corporate India is not much excited about the 25 basis point reduction in the repo rate by the Reserve Bank of India (RBI) as they feel it to be too less.
However, they also agree that the central bank cannot do much the high level of retail inflation and high current account deficit.
Prabal Banerji, CFO of Adani Power, said: “RBI is calibrating its monetary policy very well. They cannot look at interest rate reduction in isolation and being completely oblivious of its impact on economy of a more important parameter like Inflation.”
Naina Lal Kidwai, country head of HSBC and president of the Federation of Indian Chambers of Commerce and Industry said the cut in the repo rate will give the right signal to the members of India Inc. Going ahead, it will be important to continue with this stance at least over the next quarter, she added.
RBI reduced policy rate in order to reduce cost of borrowing in the economy so that credit offtake picks up and the economy recovers from the slowdown.
But the government must also act on its parts by continuing with its reform measures, expediting project clearances, ensuring fiscal prudence and more liberalisation to attract foreign direct investments into the country.
The fiscal and monetary authorities need to work in tandem for the country to get back on the growth path, experts argue.