New Delhi: BJP on Wednesday criticised the increase in repo and reverse repo rate by the RBI, saying it will push up interest rates and asked the Manmohan Singh government to instead go for infrastructure development programmes and manage supply of foodgrains to check inflation.
"Repo Rate hike by 50 bps will prove counter-productive. Instead of taming inflation these hikes will further trigger it. In the last 15 months the government has addressed the issue of inflation by raising Repo and Reverse Repo Rates 11 times, which has taken the rates from 5 to 8 per cent," BJP spokesperson Prakash Javadekar said.
He maintained that this would lead to an immediate increase in the finance cost of all loans and EMIs, which has become a 'way of life' of the middle class.
"It seems that the government has lost the vision on the issue of inflation and is harping only on monitory policy instead of tackling supply constraints," Javadekar said.
The BJP insisted that this announcement has come at a time when the investment climate in the country is dampened, Indian industry is losing its competitive edge in the international markets and the realty and auto sectors have been adversely affected, causing large unemployment.
"The reality is that unless the government unleashes massive infrastructure development programmes, which consumes liquidity, and effectively manage the supply of foodgrains and commodities, the inflation would not come down," Javadekar said.
He expressed surprise that the RBI and the government were continuing with such fiscal measures and claiming it would result in "sustainable downturn in inflation".
Insisting that the UPA government is lost midway, Javadekar said the erstwhile BJP-led NDA government had brought down housing loan rates to 6 per cent which resulted in expansion of demand and employment generation. That government also put emphasis on infrastructure and core sector and ensured proper food supply management in the market.
This had helped control inflation and still ensured faster growth, he asserted.