New Delhi: The Reserve Bank of India should
continue with its soft monetary policy in the forthcoming
review to spur growth as the economy is still not on a firm
footing, industry body Assocham said.
"In a bid to maintain sustenance in the current growth
momentum, we have suggested to the Reserve Bank of India (RBI) to maintain existing monetary policy so that it (economic
growth) is further strengthened in the remaining months of the
current fiscal," Assocham President Swati Piramal said.
She said the current problem of high inflation is fueled
by supply side constraints and cannot be tackled with the RBI
tightening money supply in its January 29 review.
"The RBI should not touch interest rates as that would
signal negative impact on the growth story, which still is
somehow uneven. RBI raising policy rates at this juncture will
not cool inflationary expectations till the agriculture supply
chain improves," Piramal said in her representation to RBI
Governor D Subbarao.
Further, the Industry body pointed out that despite low
interest rates, credit growth still remains much below the
target by RBI. Therefore, any increase in interest rates at
this juncture by the bank will not be healthy in the interest
of the economy.
The apex bank should wait till the end of the current
fiscal to take any view on policy rates even if some central
banks in Asia are doing so.
PTI
First Published: Tuesday, January 26, 2010, 18:22