FIEO’s take on Reserve Bank’s Monetary Policy Announcement

The Federation Of Indian Exporters Organization (FIEO) has said the latest decision of the Reserve bank of India to keep its policy rates unchanged at 6.5 per cent, reveals the Central bank’s resolve to provide further growth momentum to the economy and contain inflation,

FIEO President Dr A Sakthivel said with the US Fed also expected to keep their policy rates unchanged, the trade and industry was of the view that RBI will continue to follow the same path of maintaining the status quo on policy rates front.

RBI’s decision is focused towards the objective of achieving medium-term target of consumer price index (CPI) inflation of 4 percent within a band of +/-2 percent, while supporting growth, reiterated FIEO Chief.  

The decision to keep policy rate unchanged will further give a boost to growth through increasing investments. While most Central banks have given more weightage to inflation as compared to growth, RBI stroke a nice balance between the two, giving primacy to growth, thereby maintaining the GDP growth forecast for FY24 at 6.5 percent.

The increasing investment will lead to further production and easing of supply thus reducing inflation in coming months.The status quo in rates will help exporting community, whose cost of credit has gone up substantially due to upward revision in rates during last one and half year. This has lead to the demand to increase the interest subvention from 2 per cent and 3 per cent to 3 per cent and 5 per cent respectively. The resilient external sector growth backed by financial sector push has further given thrust to the economy. 

Dr Sakthivel said that India’s Merchant Goods and Services Exports will touch 900 Billion US dollars during 2023-24, exhibiting a growth of about 15 per cent growth, which a huge achievement is looking at the current global challenges.