New Delhi : ASSOCHAM today welcomed the RBI decision to pause the rate hike cycle, retaining the benchmark REPO rate at 6.5 per cent, stating the Monetary Policy Committee (MPC) has taken a prudent stance in the wake of high level of volatility in the global financial markets and geo-political events.

“Even as the RBI’s MPC was reviewing the credit policy for the last few days, ASSOCHAM had made out a strong case for a halt to the rate hike cycle. We must thank Governor Shaktikanta Das and other members of the MPC for responding to our call. In a way, the decision not to go in for any more rate increase would have surprised many as a larger expectation was on 25 basis points rise in the policy rates even as ASSOCHAM remained confident about the RBI striking a balance between reining in inflation and growth,” ASSOCHAM Secretary General Deepak Sood said. 

He said the policy statement has made a correct reading of the global economy and its possible impact on India which has done well in terms of growth, billed as the fastest amongst the major economies without losing sight of the inflationary risks.

”RBI’s growth projection of 6.5 percent for FY’24 as stated in the policy document, is in complete alignment with ASSOCHAM assessment. Our forecast of 6.5 percent, as released in our media interaction on April 4, was undaunted by somewhat lower projections of 6.3 percent of the World Bank”.

 While the fineprint of the RBI policy statement is tilted in favour of further leash on inflation, it is understandable in the face of continuing volatility in the global markets. ”Even though Indian banks stand in good stead without the kind of risks faced by banks in the US or Europe, RBI has cautioned them about any unforeseen spillovers. The peremptory measures speak about the agility of the Indian banking regulator. Besides, our foreign exchange reserves are back to USD 600 billion plus, giving us more cushion to deal with any headwind which may flow eastward”, said Sood.

ASSOCHAM also welcomed enabling loan accounts of the merchants with the all-pervasive UPI, stating ” India is emerging as a champion in financial technologies that would help millions of MSMEs to better manage their trade finance”.