RSS blames RBI for economic slowdown, defends Modi govt policies -Anjali Das
-National Herald/ IANS
Swadeshi Jagran Manch, the economic wing of the Rashtriya Swayamsevak Sangh has hit out at the Reserve Bank of India for not lowering rate of interest even when the inflation is down to 2%, holding it responsible for the current slowdown in the economy.
"The RBI has been the major reason for the slowdown. The Monetary Policy Committee of the RBI has been working on the wrong model and faulty framework. All over the world the rates of interest come down as inflation comes down, but in India it does not happen," said Aswini Mahajan, head of the Swadeshi Jagran Manch.
"When the rate of inflation was 10-12%, the repo rate was 8.5% even then. Now the inflation has come down to 2%, the repo rate is 5.75%," he added.
However, according to market watchers, inflation is not the only indicator for cutting down interest rates. The RBI looks at production, market demand and liquidity to decide on interest rates. With a slowing down demand resulting in less production, it will be disastrous to slash interest rates.
The quarterly results of many companies have indicated that most companies jave posted a loss in their revenue. If the RBI cuts down interest rates, this will also slash interest rates on deposits which is harmful for the economy currently.
Ratings agency CRISIL on Thursday cut India's GDP growth to 6.9% for FY20 on weak monsoon rains and muted corporate results. In its monetary policy review on June 6, 2019, the Reserve Bank of India lowered its 2019-20 growth projections to 7 per cent, from 7.2% estimated in April.
The central bank expects India's GDP to grow at 6.4-6.7% in April-September and 7.2-7.5% in October-March 2019-20.
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