CII seeks 1% rate cut, reforms

Industry Chamber CII Monday said there was an urgent need to revive investment in the country to accelerate economic growth and pitched for an interest rate cut by the Reserve Bank of India, a precondition for making loans cheaper to the industry to kick start investment.

CII’s newly elected President Kris Gopalakrishnan said to revive economic growth and to take the expansion rate to 8-9 per cent in the next two years it is essential to kick start investment.

“The RBI needs to work in tandem with the government in boosting growth by easing interest rates by at least 100 bps in the current fiscal,” he said.

Concerned over stubborn inflation, the RBI had been keeping a tight leash on its monetary policy. It cut its key rates after a gap of nine months in January this year.
Gopalakrishnan said supply side constraints is the main reason for inflation and reduction in interest rates would help in enhancing investments and increase in boosting capacity.

“There are certain things which we can do at the domestic level to boost economic growth. We can not do much (to improve) the external factors,” he said.

Gopalakrishnan stressed the need for the Cabinet Committee on Investment (CCI) to aim for making a repository of the top 50 stalled projects in terms of the investment incurred and go for their revival on a priority basis.

“Streamlining procedural reforms is another major step for India to catapult itself to the high growth trajectory,” he added. He asked the government to allow FDI in insurance, banking and pension funds.

On governance, he said that there is need for independent regulatory authorities for coal, real estate and health.