The Hindu Business Line : FICCI calls for easing of monetary policy

New Delhi, June 7 Anticipating a further tightening of the monetary policy in the wake of inflation touching a new high of 8.24 per cent for the week ended May 24, FICCI has cautioned that the central bank must take a balanced view of the evolving situation.

The chamber said that the continuous tightening of the monetary policy over the last one year had already taken a toll on industrial growth, dragging it from 14.8 per cent in March 2007 to 3 per cent in March 2008.

FICCI has expressed concern that any further tightening of monetary policy at this juncture would further depress the performance of the industrial sector.

FICCI has suggested that the central bank should ease the monetary policy stance and revise interest rates downwards.

“The downward revision in the interest rates would ease the cost pressure on the manufacturing sector.

“Lowering of the interest rates would lead to a sustainable solution through expansion of capacity that in turn would ease the supply constraint.

“It would give a boost to investment activity and thereby ensure greater availability of inputs and raw materials for higher industrial and economic growth,” said a chambers statement.

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