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India Inc pitches for interest rate cut to boost industrial production

15 Dec 2014 Evaluate

Concerned over the contraction in industrial output growth during October, India Inc has stated that Reserve Bank must slash interest rates urgently to spur demand.   Dashing hopes of recovery, industrial production contracted by 4.2 percent in October, mainly on account of poor show by the manufacturing sector. The manufacturing output which accounts for around 75 percent of the IIP index, contracted by 7.6 percent in October, as compared to a dip of 1.3 percent in the same month last year.       

Ficci President Sidharth Birla has asserted that the fall in manufacturing growth in October is broad-based and it not only reflects slowdown in investments but also the subdued consumer demand. Out of the 22 industry groups, 16 industries in manufacturing showed negative growth in October. Therefore, the central bank should cut the interest rates urgently to improve the demand in the economy. Sidharth Birla also emphasized the need for faster roll-out of reforms announced by the government to boost the economic growth.

The Confederation of Indian Industry (CII) President Ajay S Shriram stressed that key macroeconomic indicators such as CAD and inflation is under control and industry is also positive about additional investments. Thus, it is the appropriate time for RBI to slash the interest rate to boost investments and kick-start the economy. CPI inflation eased to 4.38 percent in November as compared to 5.52 percent in October, helped by the lower prices of food and fuel.

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