Mr. Anil Khaitan, President, PHD Chamber of Commerce and Industry has expressed concern and disappointment over the increase in policy repo rate by 25 bps from 6% to 6.25% by RBI in Second Bi-monthly Monetary Policy Statement, 2018-19.
As IMD has projected favourable monsoon condition in 2018, high inflation should not be a worry at this juncture, said Mr. Khaitan. Though, the economy has recovered very sharply from the affects of demonetisation and teething problem of GST, strong and sustainable growth trajectory is yet to be realised, added Mr. Khaitan. The hike in policy rate would affect the overall business sentiments including the production possibility frontiers of industry, expansion of trade and services sector activity and rural demand, said Mr. Khaitan.
Industry, especially small and medium enterprises are facing acute problem in availing finances from the banks vis-a-vis recent stringent norms adopted by few Public Sector Banks (PSBs), said Mr. Khaitan.
The working capital is already impacted because of buyer-credit limits under the LoUs/LoCs which has impacted billions of dollars from the system.
We urge the RBI to adopt softer monetary policy stance to reduce costs of borrowings and strengthen the economic growth trajectory, going forward, said Mr. Khaitan.