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<p id="1"><strong>Mumbai: </strong>The Confederation of Indian Industry (CII) has asked the RBI to moderate its pace of monetary tightening as India is not immune to the global &lsquo;polycrisis&rsquo;. The polycrisis refers to multiple headwinds arising out of risk of a global recession due to rate hikes, high inflation and worsening financial conditions.</p>
<p id="2">The statement from the CII comes ahead of the RBI&rsquo;s monetary policy committee (MPC) December 5-7 meeting. Most economists expect the RBI to moderate its rate hikes from the 50 basis points (100bps = 1 percentage point) announced after the earlier three MPC meetings to around 35bps. CII has suggested a rate hike between 25-35bps. The expectation of a lower rate hike follows consumer inflation dipping to below 7% in October. In November, several agencies had lowered their growth forecasts to below the central bank&rsquo;s forecast of 7%.</p>
<p id="3">&ldquo;Domestic demand is recovering well as mirrored by the performance of host of high-frequency indicators, however, the prevailing global polycrisis is likely to impinge on our growth prospects too. Given the headwinds to domestic growth mainly emanating from the global uncertainties, the RBI should consider moderating the pace of its monetary tightening from the earlier 50bps,&rdquo; the CII statement said.</p>
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<p id="2">Last week, chief economic advisor V Ananta Nageswaran was the first to warn about the global polycrisis, which could impact India by&nbsp;hitting exports. &ldquo;The incipient signs of domestic recovery need to be preserved to help accelerate movement towards a normalised growth scenario. As in the past, the RBI should use all the weapons in its arsenal to ensure that while through its actions inflationary,&rdquo; said CII.</p>
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<p id="2">Until now the industry has been supportive of the RBI&rsquo;s rate hikes, which have added up to 190 basis points since May 2022, but corporates are now beginning to feel the adverse impact. CII&rsquo;s analysis of results for 2,000 companies in the second quarter (July-September 2022) shows that both toplines and bottom lines have moderated on sequential and annual basis. &ldquo;Moderation in pace of monetary tightening is the need of the hour,&rdquo; said CII.</p>
<p id="3">Adding to the case for an interest rate hike is the gap existing between credit and deposit growth, an additional rate hike will incentivise savers, thus providing an impetus to deposit growth and help narrow the credit-deposit wedge.</p>
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Industry body calls for slower rate hikes

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