Industry body ASSOCHAM commended the Reserve Bank of India’s choice to keep the repo rate unchanged, viewing it as a move to bolster trade and industry against supply-side shocks. ASSOCHAM President Nirmal Kumar Minda emphasized that stable interest rates would stimulate demand, potentially benefiting investments, consumption, employment, and overall economic growth.
Minda praised the RBI’s strategic measures, foreseeing a positive impact on growth and inflation control. He particularly lauded initiatives like covering hedging costs until September 30, 2026, extending export proceeds duration, increasing investment limits for NRIs and OCIs in listed equities, and broadening the scope of ‘specified securities’.
According to ASSOCHAM, raising the repo rate during supply-side shocks could dampen economic growth drivers, as there is no strong link between the repo rate and CPI when inflation is supply-driven. The organization commended the RBI’s prudent stance, anticipating a decline in inflation post resolution of West Asia conflict, given the current global uncertainties and supply chain disruptions.
Despite global challenges, ASSOCHAM highlighted that the projected CPI inflation of 5.1% for 2026-27 remains below the upper limit of 6%. The financial sector in India appears robust, with healthy credit growth, favorable liquidity conditions, and adequate capital reserves in banks and NBFCs. The country’s external sector stability is supported by strong services exports, remittances, and substantial foreign exchange reserves totaling $682.3 billion.
ASSOCHAM noted the RBI’s efforts to relax investment regulations for foreign investors, broaden access to government securities, and encourage external commercial borrowings to enhance capital inflows and fortify the balance of payments.
