Buoyant over the decline in Indian inflation, India Inc urged the Reserve Bank to lower interest rates to provide boost to the sluggish economic growth adding that prevailing high interest rates scenario in economy has been adversely impacting the growth of Indian industries. Indian industrial output registered the worst performance in six months with contraction of 2.1% in November on y-o-y basis as compared to 1.8% in October.
Meanwhile, the central bank had already noted the inflation fight to remain at its top of agenda and has been continually raising the policy rates over the past few months in order to trim the inflation. CII Director General Chandrajit Banerjee has noted that easing of inflation at a time when industrial growth continues to be in the red should induce RBI to cut policy rates to rejuvenate industry growth. WPI inflation eased to five-month low at 6.16% in December as compared to 7.52% in November and 7.31% during the corresponding month of the previous year.
Further, Assocham Secretary General D S Rawat asserted that although achieving a sustained moderation in WPI is an issue for the country, the recently released inflation number gives scope for cutting the interest rates in a bid to create to improve domestic supply response. The President of PHD Chamber of Commerce Sharad Jaipuria said that it is inevitable to reduce the repo rate to boost the industry sector growth as growth contracted by -0.2% during the period April-November 2013-14 from a year earlier owing to the high interest rates and prevailing economic downturn.