India Inc calls for lower interest rates to boost industry

New Delhi, April 12 (IANS) Reacting to the February data for industrial production, industry bodies Friday called for rate cuts by the RBI to revive economic growth.

"It is important that the Government focuses on bringing down the interest rates to stimulate investment and consumer demand and also ensure speedy approvals for large projects under the Cabinet Committee on Investments" said Didar Singh, secretary general of the Federation of Indian Chambers of Commerce and Industry (FICCI).

Industrial output rose at a meagre 0.6 percent in February against an expansion of 4.3 percent in the corresponding month of 2011-12, government data showed Friday. The slump was mainly on account of contraction in power generation and mining, and poor performance of the manufacturing sector.

"The RBI would now hopefully reduce repo (rate) and CRR (Cash Reserve Ratio) by 50 basis points, each, on May 3 (when the central bank is due to announce the annual monetary policy)" Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII) said in a statement here.

CRR denotes the amount of money banks are required to keep with the RBI.

"While a slowdown in manufacturing sector continues to be an area of concern, what is extremely worrisome is the sharp fall in mining and electricity production which have gone into negative territory," Banerjee said.

The mining output in February declined by a massive 8.1 percent from an increase of 2.3 percent in the corresponding month of last year. The electricity sector too fell 3.2 percent from a healthy increase of eight percent in February, 2012.

However, the manufacturing production registered a growth of 2.2 percent during the month under review.

"Industrial growth of mere 0.6 per cent in February and a cumulative of 0.9 per cent is hardly a growth. We are almost slipping into the negative zone," said Rajkumar N. Dhoot, president of Assocham.

India Inc also called for faster clearance of projects by the Cabinet Committee on Investments headed by Prime Minister Manmohan Singh

"FICCI has submitted a list of large projects to the Government where we would like to see the issues resolved at the earliest" said Didar Singh.