The Indian industry on Wednesday hailed the decision by the Reserve Bank of India to cut the repo rate by 35 basis points.

Commenting on the monetary policy statement announced by RBI today, Sandip Somany, President, FICCI said, "This is an extremely encouraging move and clearly highlights the intent of the central bank to impart greater momentum to India?s growth trajectory. The 35 basis points cut in the repo rate marks a deviation from the usual quarter percentage point change that is seen whenever the policy rate is moved."

"With today's cut, RBI has lowered the policy rate by 110 basis points in the current calendar year. The central bank has also kept liquidity in the surplus mode, and it is now critical for banks to move fast and transmit this ease in policy rate in the form of lower lending rates. Unless the transmission is swift and full, we may not see a change in the consumption and investment trajectory," added Somany.

Feedback received by FICCI from its constituents shows that weak demand is a key factor that is impeding growth of industry players across sectors. This needs to change and the only way we can do this is through internal stimulus as the external environment continues to pose challenge to our growth performance.

"With RBI having lowered the policy rate for the fourth time in succession, FICCI is hopeful that we would see an improvement in the health of the economy in the months ahead," said Somany.

"It is equally important that the government front-loads its capital expenditure program for the current year and continues to push ahead with the reforms program. Additionally, we require a set of targeted interventions in key sectors that are facing stress such as telecom, real estate, automobiles, textiles and NBFCs. With the Finance Minister remaining engaged with industry on the difficult issues that need redressal, we are confident that the outlook for the economy would improve in the medium term," added Somany.