BJP criticises increase in repo rate by RBI

BJP asked the Manmohan Singh government to instead go for infrastructure development programmes and manage supply of foodgrains to check inflation.

Updated: Jul 27, 2011, 18:33 PM IST

New Delhi: BJP on Wednesday criticised the
increase in repo and reverse repo rate by RBI, saying it will
push up interest rates and asked the Manmohan Singh government
to instead go for infrastructure development programmes and
manage supply of foodgrains to check inflation.

"Repo Rate hike by 50 bps will prove counter-
productive. Instead of taming inflation these hikes will
further trigger it. In the last 15 months the government has
addressed the issue of inflation by raising Repo and Reverse
Repo Rates 11 times, which has taken the rates from 5 to 8 per
cent," BJP spokesperson Prakash Javadekar said.

He maintained that this would lead to an immediate
increase in the finance cost of all loans and EMIs, which has
become a "way of life" of the middle class.

"It seems that the government has lost the vision on
the issue of inflation and is harping only on monitory policy
instead of tackling supply constraints," Javadekar said.

The BJP insisted that this announcement has come at a
time when the investment climate in the country is dampened,
Indian industry is losing its competitive edge in the
international markets and the realty and auto sectors
have been adversely affected, causing large unemployment.

"The reality is that unless the government unleashes
massive infrastructure development programmes, which consumes
liquidity, and effectively manage the supply of foodgrains and
commodities, the inflation woould not come down," Javadekar
said.

He expressed surprise that the RBI and the government
were continuing with such fiscal measures and claiming it
would result in "sustainable downturn in inflation".

Insisting that the UPA government is lost midway,
Javadekar said the erstwhile BJP-led NDA government had
brought down housing loan rates to 6 per cent which resulted
in expansion of demand and employment generation. That
government also put emphasis on infrastructure and core sector
and ensured proper food supply management in the market.

This had helped control inflation and still ensured
faster growth, he asserted.

PTI