Assocham asks Reserve Bank of India to moderate rate hikes

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| Photo Credit: Twitter/@ASSOCHAM4India

Industry body Assocham on December 2 asked the Reserve Bank of India (RBI), which has hiked the key policy rate by 190 basis points since May, to moderate the interest rate hikes so that it does not have adverse impact on nascent economic recovery.

RBI Governor Shaktikanta Das headed six-member rate setting panel is scheduled to meet for three days from Monday to take a call on the next set of monetary policy.

The Central bank is scheduled to announce the decision of the Monetary Policy Committee (MPC) on December 7 (Wednesday).

“At most the new rate hike should not exceed the 25-35 basis points band,” Assocham said in a letter to the RBI Governor, along with highlighting other issues before the industry.

One of the key recommendations advanced by the chamber to the RBI is to treat retail loans for purchase of Electric Vehicles as priority sector lending, with a concessional rate of interest.

On September 30, the RBI had hiked the key policy rate (repo) by 50 basis points with an aim to check inflation which continues to remain its upper tolerance band of 6% since January this year.

It was the third successive hike of 50 basis points (bps). Before the September hike, the Central bank had raised the repo rate by 50 bps each in June and August, and 40 bps in May.