Industry chamber PHD Chamber of Commerce and Industry (PHDCCI) on Wednesday said skyrocketing commodity prices are severely impacting the price cost margins of businesses, especially MSMEs, observing that the RBI has a crucial role to play in balancing inflation and maintaining currency stability.
The assertion is a part of the chamber's five suggestions outlining the focus areas for RBI Governor Shaktikanta Das during his second term. Appreciating the re-appointment of Das as RBI Governor, PHDCCI said, "Under his dynamic leadership, the RBI has undertaken various conventional measures since the onset of pandemic to mitigate its impact and enhance liquidity in the economy," PHDCCI stated.
The chamber said going ahead, Mr. Das should focus on the five key suggestions during his second term.
These include attaining and sustaining a high economic growth trajectory to become a $5 trillion economy.
"Skyrocketing commodity prices are severely impacting the price cost margins of the businesses, especially the MSMEs. So, at this juncture, the RBI's role becomes crucial to balance inflation in the country and to maintain the currency stability while attaining high growth," PHDCCI suggested.
It also recommended the RBI Governor to focus on maintaining adequate liquidity in the system while balancing the inflationary pressure.
"Demand should remain intact despite the inflationary pressure as economy needs a great support of demand to move up further and to regain the lost momentum," PHDCCI said.
As another focus area, it suggested regulations and guidelines on green and sustainable banking to allocate resources towards activities and projects that lead to the environment, social and governance objective in line with international standards.
Fuel prices in India have spurted to record highs, leading to a rise in food prices and other commodities.
The government has extended the term of Reserve Bank of India Governor Shaktikanta Das by another three years up to December 2024, according to an official order.
Mr. Das was appointed the RBI's 25th governor on December 11, 2018, for a period of three years after the abrupt resignation of his predecessor Urjit Patel.