Majority of India Inc is of the view that extreme moves in the form of monetary tightening made by the Reserve Bank of India to curtail inflationary pressure would slow down economic growth, a survey by industry chamber Assocham reveals.
About 86 per cent of India's top CEOs, MDs and CFOs surveyed felt that RBI has started over reacting to the inflationary expectations without realising that increasing cost of money beyond a point would slow down economic growth, the study by Assocham Business Barometer revealed.
About 71 per cent of the 250 business leaders felt that the present inflation is a supply-driven phenomenon which required improved agriculture productivity and investment in key manufacturing sectors like cement and steel.
"Efficient and swift supply side management is the key to overcome the supply side imbalance and a hike in CRR and repo rate may not be able to sooth the inflationary expectations," Assocham President Venugopal Dhoot said in a statement.
The industry had not even absorbed the previous increment in CRR completely and another hike on March 30 has come as a surprise, he said.
Around 90 per cent respondents felt that the RBI took them by surprise without giving them any time to hedge borrowing cost in the short-run.
The RBI could have opted for a 'wait and wait watch policy' or intervened through other measures like issuing money stabilisation bonds said 75 per cent of the respondents.