The Hindu Business Line : Chambers say inflation largely supply-driven

New Delhi, June 25 In response to the hike in the cash reserve ratio, (CRR) and the repo hike by 50 basis points on Tuesday, the industry chambers shared a consensus that inflation was mainly due to the supply situation of various commodities at the domestic and global level.

“While fully appreciating the threat posed by high inflation, CII believes that action is required at global level to deal with current phase of price pressure, which is largely global supply led, said a statement from the Confederation of Indian Industry.”

“The latest move by the RBI is not counter-cyclical. We are already in a downward phase and this moderation in growth is clearly borne out by the IIP numbers.”

Voicing similar opinion, Mr Harsh Pati Singhania, Senior Vice-President, FICCI, said, “The current inflationary pressure stems from supply side rigidities. It is therefore imperative that policies are devised to ease these rigidities and increase supply of both primary articles and manufactured products.”

He further said that the latest move by the RBI was not counter-cyclical.

“We are already in a downward phase and this moderation in growth is clearly borne out by the IIP numbers,” he added.

The PHD Chambers of Commerce and Industry forecasted a further dip in industrial growth due to soaring interest rates.

“Growth in the manufacturing sector which dropped to 9.1 per cent during 2007-08 as compared to 12.2 per cent during 2006-07 might see a further dip due to decline in demand on account of expected higher interest rates on loans for automobiles and consumer durables,” the association said in a statement.

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