Hailing RBI's pruning of the key interest rates, India Inc today said the move will propel economic growth by easing fund flow and spiking the blunted consumption and investment demand.
While all anticipated a cut in repo rates, particularly after the apex bank's hawkish monetary outlook last evening, the move to infuse fund with 25 basis points cut in cash reserve ratio into the banking system took the industry by a pleasant surprise.
"This will hopefully help in reversing anaemic industrial growth observed over the last year... The release of Rs 18,000 crore with CRR cut will help in easing funds flow situation," Ficci President Naina Lal Kidwai said.
Enthralled with the cuts, hopes also started taking wings with some predicting it would spike demand and thus provide a much-needed boost to economic growth. Others suggested that it will lead to lower interest costs and improve bottomlines.
CII's Director General Chandrajit Banerjee said the weak consumption and investment demand was derailing the momentum of economic growth and today's announcement would help improve the sentiments of both consumers and investors.
The association's President Adi Godrej said the industry appreciates the signal from the RBI that the central bank is ready to promote growth in addition to anchoring inflationary expectations.
Assocham President R N Dhoot said: "The reduction is a step in the right direction. However, the system has to take this in the true spirit and benefits have to be passed on to the end users."
JSW Steel's Joint Managing Director and CFO Seshagiri Rao said: "It was much needed given that GDP growth is moderating and industrial production is decelerating month after month.
The rate cut is an encouraging move when high interest rates were having negative impact on the country's economic growth."
PwC India Director Shinjini Kumar said the RBI move is consistence with the "growth push" that the economy needs, but added that the worries due to current account were very real.
"In line with expectations, the RBI cut the repo rate by 25 bps to 7.75 per cent, but once again maintained its trend of surprising the markets by cutting the CRR by 25 bps to four per cent," said Citi Research.
Apparel Export Promotion Council's Chairman A Sakthivel said: "The tight liquidity condition which was prevailing since long will surely ease out. It will, in turn, boost our economy and robust the structural deficit in the system by infusing the permanent primary liquidity in the system."