Don't blame high interest rates, says Montek

“I would not draw any connection between the rate hike and decline in industrial production. The rate today is roughly what it was when the economy was growing at 9 per cent,” he said, when asked if RBI’s tight monetary policy was hampering industrial production.

Ahluwalia, who was talking to reporters on the sidelines of a Ficci meet, said there are other global and domestic factors that are affecting factory production.

“I do not think slowing down (of industrial production growth) should be attributed to only the short-term interest rates,” he said.

“We are concerned that the pace of growth in the economy has gone down. But it (IIP data) is only a one month affair. We need to bring this up,” he averred.

RBI should pause
CII blamed the high interest rate regime for slowdown in IIP. “This reflects the impact of RBI’s interest rate hikes together with continuous rise in inflation. With global economic scenario also deteriorating, the RBI should not only pause but begin to reverse its interest rate hikes,” CII Director General Chandrajit Banerjee said.

The top Planning Commission official emphasised upon the need to ensure that growth is revived in the next fiscal. “We have to make sure that in next year the economy recovers from what is clearly a slower growth phase in the current year,” Ahluwalia said.

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