New Delhi: The "unexpected cut" in benchmark interest rate by the RBI Wednesday is a great booster for economic growth, India Inc said while expressing hope that banks would now lower lending rates for investment and consumer loans.
CII Director General Chandrajit Banerjee said: "Coming on the back of a growth-oriented Budget, the unexpected cut in headline interest rate by the RBI sends a huge positive signal that the central bank and the government are working in tandem to provide a robust scaffolding to growth, even while not losing sight of inflation, which has now been made explicit in the objectives of the RBI."
Coming on the back of reform measures initiated in the Budget, the rate cut by RBI is a "great booster for the economic growth, which seems to be the area of focus for the central bank", he added.
Springing a surprise, the Reserve Bank of India today cut the repo rate to 7.5 percent. Earlier on January 15, it had cut lending rate from 8 percent to 7.75 percent.
Ficci President Jyotsna Suri said: "Given the cut in the policy rate, we now hope to see transmission of this move in the form of lowering of lending rates by banks for investment and consumer loans.
"As measures announced in the Budget take effect and demand situation starts improving, we could see an improvement in capacity utilisation levels leading to fresh investments being planned by industry.
"Lower lending rates by banks would provide an impetus to this trend and contribute to overall recovery in the economy."
Assocham President Rana Kapoor said the RBI action will surely boost the morale of the consumers as also lower the interest costs of the industry.
PHD Chamber President Alok B Shriram said: "The rate cut will improve market sentiment and enable businesses to raise equity.
"The growth prospects of the economy are expected to widen with revival of demand and investments," he added.
