Industry seeks rate cut ahead of Budget

Ahead of Tuesday’s monetary policy review, the last before the Budget, the industry has once again pitched for a rate cut by the Reserve Bank of India (RBI) to give a boost to the economy.

Industry bodyAssocham also sought the RBI to take note of the fact that the Wholesale Price Index (WPI) for several industrial products has remained in a deflationary mode for over a year, requiring an urgent infusion of life–saving consumer demand.

“A whole lot of manufactured products, including cotton textiles, man made products, chemicals and organics, rubber, plastics, iron and semis, have suffered deflation. Besides, there are several other items such as leather and leather products and machine tools which are near zero inflation reflecting poor demand and virtually no pricing power left with the manufacturers. It is almost a distress situation,” said Assocham president Sunil Kanoria, while seeking cut in interest rates in the policy repo by the RBI.

The Index of Industrial Production (IIP) declined by annualised 3.2 per cent in November. In the just released data for eight key infrastructure industries showed it has contracted to abysmal 0.9 per cent in December.