FIEO Welcomes status quo by RBI on Interest Rates

[FIEO Press Release dated 8^th June 2023]

Reacting to RBI’s policy rates being kept unchanged at 6.5%, goes to show the resolve of the Reserve Bank of India to further provide growth momentum to the economy and contain inflation, said Dr A Sakthivel, President, FIEO. With US Fed also expected to keep their policy rates unchanged, the trade and industry was of the view that RBI will continue to follow the same path of maintaining the status quo on policy rates front, added Dr Sakthivel. RBI feels that the MPC decision is focused towards the objective of achieving medium-term target of consumer price index (CPI) inflation of 4 percent within a band of +/-2 percent, while supporting growth, reiterated FIEO Chief.

The decision to keep policy rate unchanged will further give boost to growth through increasing investments. While most Central banks have given more weightage to inflation as compared to growth, RBI stroke a nice balance between the two, giving primacy to growth, thereby maintaining the GDP growth forecast for FY24 at 6.5 percent.

President, FIEO said that the increasing investment will lead to further production and easing of supply thus reducing inflation in coming months. Dr A Sakthivel also added that the status quo in rates will help exporting community, whose cost of credit has gone up substantially due to upward revision in rate during last one and half year leading to the demand to increase the interest subvention from 2% and 3% to 3% and 5% respectively. The resilient external sector growth backed by financial sector push has further given thrust to the economy.

Dr Sakthivel said that our goods and services exports will touch US$ 900 Bn in 2023-24, exhibiting a growth of about 15% growth, which is a huge achievement looking at the current global challenges.