India Inc demands RBI rate cut as IIP growth slides
The industry reiterated its demand for an interest rate cut by the RBI, saying it was imperative to boost growth and consumer demand.
New Delhi: As India's industrial output growth slipped to 3.1 per cent in April, the industry reiterated its demand for an interest rate cut by the RBI, saying it was imperative to boost growth and consumer demand.
Industry body Assocham said the Reserve Bank's status quo on rates has disappointed the industry as there was a room for reduction in key policy rate. The chamber highlighted the need for creating a conducive environment for investments, capacity utilisation and augmentation of industrial production on a priority basis.
The RBI in its latest monetary policy review had left the repo rate unchanged at 6.25 per cent for the fourth straight time. Industrial production growth slowed to 3.1 per cent in April due to poor show by manufacturing, mining and power sectors coupled with lower offtake of capital goods and consumer durables. The factory output measured in terms of the index of industrial production (IIP) had expanded by 6.5 per cent in April last year, the data released by the Central Statistics Office today showed.
"Overall the industrial growth seems to be stabilising and could pick up momentum if global demand is steady in the months to come. The industry is looking forward to forthcoming foreign trade policy review to further encourage manufacturing exports," Ficci President Pankaj Patel said. "A more accommodative monetary policy with lower interest rate would stimulate consumer demand that would hedge any downside risk arising from exports," he added.
Assocham urged the government to initiate more effective short-term revival measures, observing that risks to the Indian economy prevail in the form of uncertainties in the global environment, including rising global protectionism and a renewed slowdown in the Chinese economy.