India should continue with an accommodative interest rate stance, as long as necessary, to sustain and further pick up the pace of economic growth, so that respite from the Covid 19 cases is fully taken advantage in a global scenario still marked by concerns over pandemic and high energy prices, industry body ASSOCHAM said on Wednesday.

“While concerns over inflation, especially in the Wholesale Price Index (WPI), need to be addressed, measures other than reversal of accommodative stance should be encouraged. The RBI and its Monetary Policy Committee (MPC) have done a commendable job to retain the present policy rates. However, central banks in some of the developed economies are moving towards tapering the accommodative policies. We are sure and as we have been maintaining that the RBI would not follow this template and continue with the low interest rates,” ASSOCHAM secretary general Mr Deepak Sood said .

He said the soft interest rates and several other proactive measures by the Reserve Bank of India and the government under Prime Minister Narendra Modi’s flagship Atma Nirbhar programme have enabled India to weather the Covid-19 storm. ”These policies, coupled with some bold economic reforms in defence manufacturing, disinvestment, national monetisation pipeline have helped the overall business sentiment, with the result that the GDP growth in the FY22 is expected to touch the double digit figure”.

Global initiative by the crude oil importing and major consuming nations including the US and India should lead to rise in global supplies and soften prices. Prices of Brent crude have already retreated to USD 80 or below per barrel, after touching a high of USD 85 per barrel.

“Crude oil prices are on a retreat because of a variety of reasons. What is being seen as significant, is a well-coordinated approach amongst the major consuming countries, including India to exert pressure on the oil producing and exporting countries. This seems to be paying off,” the ASSOCHAM secretary general said.

He said while the Indian economy is on a fast recovery path, our capacity utilisation is still around 70 per cent. Some of the supply issues are being addressed even as the global value chain should get further streamlined. ”It is true that banks are flush with liquidity, but the credit demand is yet to pick up especially for private investment. We see this too happening, but any reversal of accommodative interest rate stance may dampen faster revival in investment,” he added.