Bangalore, October 07, 2014 – Sri S. Sampathraman, President FKCCI stated that as expected the RBI has maintained status quo on policy rates inspite of inflation hangover. Although the Consumer Price Index (CPI) has shown a declining trend in the past few months the levels are still out of the comfort zone. RBI governor had taken the same step earlier inspite of marginal growth in the second quarter, indicating that time is still not ripe to opt for rate cuts as expected by Trade and Industry. This perhaps is one of the reasons for the RBI to come to the decision that this is not the time for change.
The inflation is yet to be tamed to reasonable levels and growth has to be achieved through higher exports in the coming months. The straight jacket approach in controlling inflation should not be followed in the current scenario. Unless CPI is controlled at less than 8 percent interest rates will continue to rule at the present rates. Markets should come to the rescue with a new approach to quell inflation.
Though RBI is moving on the expected lines in view of the continuation of welfare measures of the previous govt by Shri Modi and the continued higher inflation, Raghuram Rajan should also see the merit in Nobel Laurite Joseph Staglich’s logic reduce rates and allow the supply side to catch up fast. The current position of RBI and GOI of “egg first or hen first” only stagnates the economy. CCI Newswire
