FIEO welcomes key rate cuts to support fiscal stimulus

October 4, 2019: The Federation of Indian Export Organisations (FIEO) has welcomed the Reserve Bank of India (RBI) cuts in benchmark interest rates recently.

The RBI cut its benchmark interest rates for the fifth time to support other fiscal measures announced by the government to boost growth. The RBI reduced its key lending rate (the repo rate) by 25 basis points to 5.15 percent, which takes cumulative cuts so far this year to 135 bps, observed Sharad Kumar Saraf, president, FIEO.

"RBI has rightly acknowledged the challenges faced by the global economy as both advanced as well as emerging markets are showing weakening demand and contracted manufacturing. WTO [World Trade Organisation] has already significantly cut its forecast for the global trade growth to 1.2 percent for 2019. The challenges in exports will continue and may aggravate with geo-political situation," said Saraf, urging the government to ensure that various fiscal stimulus announced by the are put into operation so that the benefit flows down to the industry.

The FIEO chief said that reduction in the credit rates will further encourage investment both by the domestic companies, as well as by FDIs since corporate tax rate in India is now amongst the best in the world. He, however, urged the banks to ensure that the cut in the rates by RBI are adequately reflected in the lending rates of the bank so that private investment may be encouraged and consumer loans may get a push to help various segments of economy.