Industry Welcomes RBI’s Monetary Policy Stance; Hopes For Retaining Stimulus
By | Published: January 9, 2010
Along with the welcoming of RBI’s reviewed monetary policy, the FICCI and other industry think tanks have expressed hope of the retention of stimuli package, since the signs of economic recovery have not yet been stabilized.
The Reserve Bank of India (RBI) slightly tightened its monetary policy by raising the statutory liquidity ratio by 100 basis points while retaining most policy rates, with signs of an industrial recovery providing the necessary cushion.
“We studied all arguments, for and against the easing of stimulus measures. The balance of judgement is to sequence the exit so that the recovery process is not hampered and inflation is anchored,” said Governor D. Subbarao at the central bank’s headquarters here.
It, however, removed emergency liquidity support measures by ending the repurchase facility for non-banking finance companies (NBFC), mutual funds and housing finance companies.
“RBI’s move to keep the repo as well as reverse repo rates unchanged was in the right direction,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).
“It is prudent to retain the monetary stimulus provided a few months ago, which along with the fiscal stimulus has helped in economic revival of the Indian economy,” Banerjee added.
“The decision to introduce a fourth category of NBFCs as ‘infrastructure NBFCs’ is a welcome move and has been one of the CII’s recommendations to facilitate infrastructure funding.”
Industry Welcomes RBI’s Monetary Policy Stance; Hopes For Retaining Stimulus
Along with the welcoming of RBI’s reviewed monetary policy, the FICCI and other industry think tanks have expressed hope of the retention of stimuli package, since the signs of economic recovery have not yet been stabilized.
The Reserve Bank of India (RBI) slightly tightened its monetary policy by raising the statutory liquidity ratio by 100 basis points while retaining most policy rates, with signs of an industrial recovery providing the necessary cushion.
“We studied all arguments, for and against the easing of stimulus measures. The balance of judgement is to sequence the exit so that the recovery process is not hampered and inflation is anchored,” said Governor D. Subbarao at the central bank’s headquarters here.
It, however, removed emergency liquidity support measures by ending the repurchase facility for non-banking finance companies (NBFC), mutual funds and housing finance companies.
“RBI’s move to keep the repo as well as reverse repo rates unchanged was in the right direction,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).
“It is prudent to retain the monetary stimulus provided a few months ago, which along with the fiscal stimulus has helped in economic revival of the Indian economy,” Banerjee added.
“The decision to introduce a fourth category of NBFCs as ‘infrastructure NBFCs’ is a welcome move and has been one of the CII’s recommendations to facilitate infrastructure funding.”