Repo rate cut to induce demand, stoke up manufacturing and overall economic growth : PHD Chamber

While welcoming the fourth Bi-monthly Monetary Policy Statement for 2016-17 by RBI, Dr. Mahesh Gupta, President, PHD Chamber of Commerce and Industry said that reduction in repo rate was much needed at this juncture on account of good monsoon scenario and comfortable inflationary scenarios.

Monetary Policy Committee (MPC), RBI has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5% to 6.25% with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75%.

Dr. Gupta added that the move to reduce repo rate by Monetary Policy Committee of Reserve Bank of India is going to rejuvenate demand and re-capture industrial growth and boost overall economic growth in the coming times.

The negative growth of IIP at (-) 2.4% for the month of July 2016 is a major cause of concern as growth of Capital goods has decelerated significantly by (-) 29% in July 2016 which is indicative of subdued pace of investments in the economy, said Dr. Mahesh Gupta.

However, the growth of consumer durables at 5.9% in July 2016 is encouraging in anticipation of bumper kharif crops vis-à-vis good monsoon scenario. We believe there is a need to push domestic demand particularly the rural demand in the economy, said Dr. Gupta.