RBI needs to be more hawkish to tame inflation
The six-member monetary policy committee's decision to keep key rates unchanged was on expected lines and may continue in the near future to support growth as private consumption has started and several stalled projects have been revived due to the government's efforts, stated ASSOCHAM national President, Dr. Niranjan Hiranandani.
The MPC on Friday decided to keep the repo rate unchanged at 4 percent. The reverse repo rate too stands unchanged at 3.35 percent.
Dr Hiranandani stated that the Reserve Bank of India needs to have a hawkish stance while looking at the inflation figures and try to taper it further in order to mitigate the supply-side pressure.
"The pro-active stance of the government to tackle the supply side issues would be instrumental in reducing the food prices further. As the numbers show that the economy is recuperating at a quicker pace than anticipated is a very good sign. There are several sectors which are showing an upturn consolidating the fact that the GDP growth numbers would be in positive soon," He added.
Limit for contactless card transactions to be raised from Rs 2,000 to Rs 5,000 per transaction from January and the announcement to make the RTGS system operational round the clock is a welcome step, Dr. Hiranandani said.
The RBI announced that after the dismal 23.9 percent contraction in the April-June quarter, the economy has recovered with the July-September quarter contracting to 7.5 percent. The industry is anticipating the Jan-March quarter to be positive, he said.