New Delhi, June 5 (IANS) Industry chamber ASSOCHAM on Friday praised Reserve Bank of India’s decision repo rate pause as steps to support trade and industry, as stable rate shields growth from supply‑side shocks.

Nirmal Kumar Minda, President, ASSOCHAM said stable interest rates “will support demand and potentially benefit investments, consumption, employment, and overall economic growth.”

The “well-calibrated measures by the RBI will create a promising approach to growth and to control inflation,” he added.

Measures such as bearing full hedging costs until September 30, 2026, restoring export proceeds to nine months, raising investment limits for NRIs and OCIs in listed equities without SEBI registration, and expanding the universe of ‘specified securities’ are “highly appreciable”, Minda said.

Repo rate hikes are ineffective against supply‑side shocks, weaken economic growth drivers, the statement from ASSOCHAM said, adding there is no strong correlation between the repo rate and CPI when inflation is driven by supply-side shocks.

“At this juncture, the RBI’s rational approach is highly commendable, as the rise in inflation is short-lived and will decline sharply once the conflict in West Asia is resolved,” the statement added.

In the current global environment, marked by uncertainty and supply chain challenges, policy measures that improve supply conditions, enhance productivity, and ensure market stability will yield better outcomes.

Despite global headwinds, CPI Inflation projected at 5.1 per cent for the year 2026-27 is still below the upper band of 6 per cent, Minda noted.

The banking and financial system remains healthy, with strong credit growth, comfortable liquidity conditions, and banks and NBFCs maintaining adequate capital buffers. India’s external sector also remains relatively stable, supported by strong services exports, remittances, and foreign exchange reserves of $682.3 billion.

RBI eased investment norms for foreign investors, expanded access to government securities, and promoted external commercial borrowings to strengthen capital inflows and support the balance of payments, the chamber said.

—IANS

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