London: Praising the new RBI Governor Raghuram Rajan for "not falling to populism", leading NRI industrialist Lord Swraj Paul Sunday supported the decision to raise a key interest rate which had disappointed the Indian industry.
"I congratulate the governor for his policy because he has not fallen to populism but is doing the best for the economy and the country. (In the) long-term, the economy needs correction. There is no better time than to do it now," Lord Paul said.
Rajan on Friday unexpectedly raised the policy rate by 0.25 percent, the first increase in almost two years, to keep inflation under check. There were expectations that RBI would maintain a status quo on policy rates.
"Sooner or later, we will have to create correction to the economy by bringing the current deficit down.
"The Food Security Bill is very good and also some of the other measures...For meeting the needs of the ordinary people of India, particularly the poor and the middle class.
"Inflation must be kept down as that hurts these people most," Lord Paul said.
Reacting to Rajan's move, CII Director General Chandrajit Banerjee had said the repo rate hike could have been avoided as the industry is already reeling under pressures of high cost of capital and low availability in a tight liquidity situation.
"The increase in repo rate comes as a surprise," Banerjee said.
First Published: Sunday, September 22, 2013, 15:50