The 25 basis points increase in policy repo rate to 6.50% is on expected lines considering that core inflation remains a concern even as both retail and wholesale inflations have shown a downward trend. While it is paramount to keep inflation in check, the priority now should be on giving a strong thrust to exports to drive economic growth.
The higher public spending proposed by the Union Budget for FY24 would certainly keep the growth momentum going but weak exports could take the shine off. The engineering goods exports suffered a year-on-year decline for the sixth straight month in December 2022 and the pace of decline also accelerated.
In view of the impending global downturn and its impact on trade, the engineering goods sector needs support. The high-interestg exporters in the international market and therefore it is imperative to provide export finance at reasonable rates.