Millennium Post

Inflation down and IIP up, India Inc bays for rate cut

Economic data released on Wednesday revealed that retail inflation eased to a 25-month low of 8.1 per cent in February and industrial output as measured by the Index of Industrial Production (IIP) grew by 0.1 per cent in January after contracting for three months in a row.

However, moments after these small bits of good news, which came after more than a year of sustained gloomy data, the US-dominated Indian corporate sector unleashed a campaign to demand a rate cut by the RBI in its monetary policy scheduled on 1 April.

Corporate sector representatives and their collaborators in the bureaucracy, academia, policy circles and media continued a high-decibel shouting match on TV and on the Net to pressure the predominantly pro-American Manmohan Singh Government to lower benchmark interest rates, a move which would seriously jeopardise the slow retreat that the economy has been making from the galloping inflation rates of the past few years.

‘This should spur the RBI to give a predominance to growth and cut interest rates in its forthcoming monetary policy as the negative growth of capital and consumer goods, especially consumer durables, reinforces the view that escalating interest costs are impeding investment revival,” said CII Director-General Chandrajit Banerjee.

PHD Chamber of Commerce and Industry President Sharad Jaipuria said, ‘RBI at this juncture should come forward to reduce the policy rates and help the industrial activity to recover at a faster pace.’
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