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Govt urges RBI to cut interest rates for industry to boost economy

13 Jul 2012 Evaluate

In an attempt to boost the manufacturing activity, the Commerce and Industry Ministry has urged Reserve Bank of India (RBI) to consider reforms in the differential lending rates for the industry. The industrial production growth in May, 2012 has slowed down to 2.4%, due to contraction in capital goods and mining output, triggering concerns about the ailing sector have prompted the ministry to suggest the lending rate cut to RBI.

According to the data, the capital goods output declined by 7.7% in May, as against a growth of 6.2% in the same month last year. Mining output contracted by 0.9% in May, as against growth of 1.8% in the same month a year ago.

The manufacturing sector, which constitutes over 75% of the index, registered a growth of 2.5%, as against 6.3% in May 2011. On the other hand, April IIP growth rate was also revised downwards to 0.9%, from the positive 0.1% reported earlier.

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