Cut interest rates to boost economy, Sharma tells RBI

 Upset over “disturbing” decline in industrial growth, Commerce and Industry Minister Anand Sharma, on Tuesday, made a case for the Reserve Bank of India (RBI) to cut interest rates in its forthcoming credit policy review.

“I would urge them (RBI) to look at the present depressed investment climate and the disturbing numbers of fall in the manufacturing core sectors and IIP (Index of Industrial Production) numbers,” he told reporters.

Sharma said while it is a difficult job for the central bank to have a balance between growth and inflation, “at the same time, economic activity has to continue.

Asked about the rupee depreciating over 20 per cent against the US dollar, Sharma said that the Commerce Ministry is in regular touch with the Finance Ministry and the RBI.

“We are constantly talking to the Finance Ministry and the Reserve Bank. We are for stable rupee and hope the current situation won’t last for long. We will be able to lift the investment sentiment,” he said.

Sharma said that so far as the exports are concerned, while the growth numbers would vary, “We are working on a plan to turn around the situation by autumn (September-November).” After all, India did manage a reversal of the trend from a huge 39 per cent deceleration of exports in May 2009, he said.

FDI in retail

Meanwhile, with the “crisis-ridden” economy posing “testing times” for the country’s leadership, Sharma has appealed to the UPA allies to allow FDI in multi-brand retail and support other key reforms.

Sharma sought to link the controversial issue of foreign direct investment (FDI) with the economic slowdown and appealed to the political parties, mainly the UPA allies such as Trinamool Congress to allow implementation of the Cabinet decision.

The minister said he would continue with “consistent political persuasion since more than half the states are keen on FDI in retail. West Bengal Chief Minister and Trinamool Congress chief Mamata Banerjee has her strong reservation, I do respect”.

But, he said, there are chief ministers who support and want to open retail to foreign investment.