Repo rate hike is in line with expectations; RBI expected to remain cautious while focusing on economy achieving full potential: FICCI

Feb 08, 2023

• Indian economy inherently resilient and has wherewithal to overcome short term turbulence in its pursuit of inclusive and sustainable growth 

NEW DELHI, 08 February 2023: Commenting on the monetary policy announced today, Mr Subhrakant Panda, President, FICCI said, "The 25 bps hike in policy repo rate by the Reserve Bank is in line with expectations. While the inflation trajectory over the course of next year is expected to be below 6 per cent and will be somewhat of a reprieve, there is an upside risk on account of geopolitical factors. Hence, the Central Bank is expected to remain cautious while focussing on the economy achieving its full potential."

"Growth estimates for the first half of 2023-24 have been revised upwards noticeably, and we believe the Union Budget presented last week will provide a fillip. While we are encouraged by the economic prospects, according primacy to growth was essential given the uncertain environment globally. The historic outlay on capital expenditure, amounting to 3.3 per cent of GDP, is well placed and will set in motion a virtuous cycle by also crowding in private investments. The Indian economy is inherently resilient and has the wherewithal to overcome short term turbulence in its pursuit of inclusive and sustainable growth," Mr Panda added.

In its latest outlook, the IMF has revised upwards the global growth estimates for 2023, which augurs well for our economy.

"We also welcome the guidelines for Regulated Entities on the broad framework for acceptance of green deposits and the disclosure framework on Climate-related Financial Risks. Further, the announcements pertaining to enhancing the scope of TReDS by providing insurance facility for invoice financing, permitting all entities/institutions undertaking factoring business to participate as financiers in TReDS, and permitting rediscounting of invoices. Taken together, it should certainly enable better cash flows for MSMEs," said Mr Panda.