Expressing 'surprise' at RBI's decision to maintain status quo on key policy rates, the India Inc on Friday said the central bank should have cut key rates to spur growth.

"The RBI's policy statement has taken the industry by surprise. The RBI should have sent a far stronger signal of growth while understandably, it waits to see the effects of the recent policy moves of reduction in CRR and repo rates before the next round of reduction," Ficci President Rajeev Chandrasekhar said.

The chamber said the credit policy has been framed keeping in mind the 7 per cent inflation target for the current fiscal.

"At the present juncture the need, however, was to give some critical boost to growth by pushing more credit to the productive sectors," it said. There is a need to cut the CRR by another 200 basis points and repo rate by 50 basis.

The apex bank had in the last two weeks reduced CRR by 2.5 per cent and short term lending rate by 1 per cent.

Industry body CII, however, said given that the RBI has already announced several measures over the past weeks to deal with the effects of the global financial crisis, the chamber understands that today's policy is on the expected lines.

"The fundamentals of the economy are strong and the RBI has done well to stress that India's financial sector remains stable and healthy," CII director general Chandrajit Banerjee said.

The policy statement clarifies that the RBI would continue to focus on financial stability.

Assocham president Sajjan Jindal said though the apex bank has been constantly reviewing the monetary development in the wake of current downturn, it should have reduced the repo rate by 100 basis points and brought down CRR at 6 per cent.

The RBI should urgently create a mechanism for weekly monitoring of banks lending to ensure smooth extension of finances to Indian Inc, Jindal said.

Expressing disappointment, PHD chamber president L K Malhotra said the RBI did not consider adding further liquidity into the banking system by reducing CRR. 

The chamber has asked the RBI to keep vigil on the monetary situation to ensure adequate flow of credit at affordable cost to various sectors of the economy.

 President of exporters body FIEO Ganesh Kumar Gupta said that measures such as enhancing remittances to $3,00,000 for imports (from the existing limit of $1,00,000) for overseas suppliers and increasing limit for advance remittance for imports both for goods and services to $50,00,000 without bank guarantee\stand by letter of credit are positive and would help the MSME sector.

• The Monetary and Credit Policy 2008-2009