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India needs to continue with low interest rate to ensure economy picks up on a sustained basis: Industry body

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All eyes on RBI and its interest rate regime

India should continue with an accommodative interest rate stance, as long as necessary, to ensure a sustained pick up in the pace of economic growth, industry body Assocham has prescribed.While central banks in several developed economies are gradually moving towards tapering the accommodative policies, the industry body hopes that the Reserve Bank of India (RBI) continues with the low interest rates.

“While concerns over inflation, especially in the Wholesale Price Index (WPI), need to be addressed, measures other than reversal of accommodative stance should be encouraged,” Deepak Sood, secretary general. Assocham said.

Also read: Indian economy on a strong wicket but hardening of interest rates a cause for concern: BJP's economic affairs spokesperson

Sood said the soft interest rates and several other proactive measures taken by the RBI and the Narendra Modi administration towards the Atmanirbhar programme have enabled India to weather the Covid 19 storm.

''These policies, coupled with some bold economic reforms in defence manufacturing, disinvestment, national monetisation pipeline have helped the overall business sentiment, with the result that the GDP growth in the FY' 2021-22 is expected to touch the double digit figure,” he said.

Sood also said while the Indian economy is on a fast recovery path, capacity utilisation is still around 70 per cent. A host of the supply side issues are being addressed amid the need to further reorganise global value chain.