Amid the gloomy economic environment and the RBI’s stance of protecting the domestic currency even at the cost of growth, Industry body CII has said that India needs to get back to 8-9 percent economic growth by attracting investments that have been choked by the high interest regime.
CII president, S Gopalakrishnan said that “Rising interest rates are counter-productive and they discourage investments”. He stated that though RBI has done a very good job in containing volatility with its monetary controls. But for long term economic growth the interest rates are too high and there is a need to cut CRR by 100 basis points and repo rates by 75 basis points. Though, he also acknowledged that the recent weakening in the Rupee has raised the upside risks for inflation.
Gopalakrishnan has further called for measures to increase investors’ confidence. He said that fiscal consolidation and maintaining the momentum of Economic reforms are among the measures that will hold the key to restoring investors’ confidence. In his opinion the implementation of Goods and Services Tax (GST) itself will add 1.5 percent to the GDP straightaway. He also struck a note of optimism, saying that with the government taking a few positive measures, CII hopes that fiscal consolidation will take place gradually over the next few years.
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