India Inc. Hails RBI's Liquidity Easing Measure
NEW DELHI: India Inc. welcomed the Reserve Bank of India's decision to reduce assets liability of banks and thereby easing liquidity. The Confederation of Indian Industry (CII) welcomed the central bank's decision to reduce the statutory liquidity ratio (SLR), which is the quantum of liquid assets banks have to hold against their deposits by 50 basis points.
CII's director general Chandrajit Banerjee said the policy announcement has shifted the spotlight back on growth while restraining inflationary pressures in the economy. "Industry believes that the reduction in the SLR is a clear message from the RBI that growth is a priority with RBI and would help availability of capital," Banerjee said.
CII suggested that to contain inflation, the government should address supply-side bottlenecks in production and distribution in agriculture sector like timely intervention to release excess food stocks, permit key food imports and dismantle the system of administered prices. The Federation of Indian Chambers of Commerce and Industry (FICCI), another leading industry lobby, too welcomed the SLR cut. However, it said that a cut in key lending rates would have encouraged investments.
"After this policy, our hopes are singularly hinged on the forthcoming Union Budget for reviving growth," said Sidharth Birla, president of FICCI. "FICCI has consistently advocated that monetary policy must take due cognizance of all factors and not anchor itself to just inflation. We would have appreciated the central bank facilitating a revival of capex (capital expenditure) cycle by exhibiting softer stance on policy rates."
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