The Hindu Business Line : FICCI, CII pitch for rate cut

Taking a cue from the US Federal Reserve which cut the interest rates by 75 basis points, the Fedearation of Indian Chamber of Commerce and Industry and the Confederation of Indian Industry have urged the Reserve Bank of India to signal interest rates cuts by 25-50 basis points.

“With inflation under control and hovering around three per cent, it is the right time for the RBI to cut repo and reverse repo rates that are currently at 7.75 per cent and six per cent respectively by 25-50 basis points to cover the relative competitive disadvantage India has on the macro economic fundamentals.

“This move would strengthen the economic fundamentals and also boost investors’ confidence,” said the CII President, Mr Sunil Bharti Mittal, in a statement.

He said that lower interest rate would go a long way in boosting demand and investments. “The RBI must cut the repo rate by at least 25 basis points this month itself and then follow up with further cut of another 25 basis points within the next two months,” said the FICCI President, Mr Habil Khorakiwala.

The chambers stated that the Industrial Production Index had shown a decline, signalling slowdown in manufacturing. The FICCI’s latest Business Consumer Survey released in December 2007 showed that while initially high interest rates affected consumer goods industry, now even the intermediate and capital goods sectors were being impacted.

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FICCI, CII pitch for rate cut