RBI stays committed to growth; big positive in the policy review: ASSOCHAM secretary general, Mr Deepak Soods statement on the policy

Friday, October 09, 2020

New Delhi, 09th October 2020:
RBI has rightly earned kudos for its accommodative stance on the benchmark interest rates, without even changing the same. It’s rare - when so much optimism is shared with the RBI even when there is no change in rates. The reason for an all-round welcome response to the RBI credit policy review and keeping the rate unchanged at four per cent is that the central bank has asserted that it would continue with the “accommodative stance as long as necessary.” This means, the RBI’s newly constituted Monetary Policy Committee is committed to reviving growth, even as it expects the inflation to moderate to the target levels.
 
The easing of risk weights to the housing projects would go down as one of the most critical counter-cyclical measures to cope up with the challenges thrown in by the COVID-19 on the economic activities. The banking regulator has aptly realised the importance of the housing sector as a multiplier and generator of employment. Banks would be encouraged to lend more to the beleaguered sector.  Easing of norms for lending to the states would help adequate availability of liquidity with the states for an increased government spending both at the Central and state levels.
 
Governor Shaktikanta Das’ “dared to be optimist” approach shows his steely resolve to face the unprecedented situation arising out of the COVID-19 pandemic. The industry expects the restructuring of the loans, as work in progress, using valuable inputs from the K V Kamath Committee. Some of the sectors such as hospitality may still need significant hand-holding; while others reviving fast need a pragmatic approach of the RBI and the fiscal authorities.
 
The RBI’s assessment about the inflation moderating towards the target level is correct as the supply bottlenecks are being increasingly removed. Growth certainly needs a positive bias at this stage.
 
 
About ASSOCHAM:
ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. It was established by promoter Chambers, representing all regions of India. Having in its fold over 400 Chambers and Trade Associations, and serving over 4.5 lakh members across India. ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. More information available on www.assocham.org
 
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