Leading industry chamber Assocham on Friday stated that the Reserve Bank of India's (RBI) decision to cut the cash reserve ratio by 50 basis points, releasing ₹1.16 lakh crore into the banking system, is a pragmatic measure to maintain the inflation-growth balance in light of the evolving macroeconomic situation.
The chamber also welcomed the measures to boost India's foreign exchange inflows by revising the FCNR(B) rates, thereby providing stability in the forex market.
"The decision by the RBI monetary policy committee to keep the policy rate unchanged at 6.50 per cent while slashing the CRR by 50 basis points should be seen as a holistic approach to maintaining a good balance between keeping inflation under control for sustainable economic growth," said Assocham President Sanjay Nayar.
Assocham Secretary General Deepak Sood added that releasing ₹1.16 lakh crore through the CRR cut should provide significant relief to the banks and industry, as early signs of liquidity tightening had been observed.
While the downward GDP growth projection of 6.6 per cent for the current fiscal year is realistic, the growth trajectory is expected to normalise above 7 per cent from the fourth quarter of 2024-25 into the next financial year.
“We agree with RBI Governor Shaktikanta Das' assessment that the slowdown in economic activity has bottomed out,” said the industry chamber.
Regarding inflation, as the RBI Governor has stated, the situation should ease in the next couple of quarters due to positive prospects for the winter Rabi crop and the normalisation of food and vegetable prices from January onward.
CS Setty, Chairman of the State Bank of India, said the monetary policy announcements are pragmatic, candid, and have crossed important milestones in regulatory and development policy.
“The decision to form a committee to investigate the issue of ethical AI in financial services and the use of technology to detect mule accounts is timely,” he added.
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