Concerned over the prevailing high interest rates in economy, Commerce and Industry Minister Nirmala Sitharaman has sought for reduction in interest rates to provide level playing field to domestic industry. The minister has stressed that high interest rate has increased the cost of capital for companies and barred their capital expansion plans.
Nirmala Sitharaman also urged the banks to focus more on lending small and medium enterprises units. During April to October period of this fiscal, manufacturing output which accounts for around 75% of the IIP index, grew by marginal 0.7 per cent in the reported period as against -0.1 per cent contraction in year ago period.
The Reserve Bank of India (RBI) targets to contain the CPI inflation at 8 per cent by March 2015 and 6 per cent by March 2016. Keeping inflation battle at the top of agenda, the RBI has kept interest rate unchanged at 8 per cent since January 2014 despite industry and government urging it to cut rates. Meanwhile, CPI inflation eased to 4.38 per cent in November as compared to 5.52 per cent in the previous month and WPI inflation declined to five and half year low at 0 per cent. On the other hand, Indian GDP growth slowed down to 5.3 per cent y-o-y to Rs 14.39 lakh crore in Q2FY15 as against 5.7 per cent in the previous quarter mainly due to sluggish investment and low demand. The RBI is slated to review its monetary policy on February 3.