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Our Bureau

New Delhi, Oct. 11 Subsequent to the central bank’s move of reducing the cash reserve ratio by 150 basis points, industry chambers have sought a cut in repo rates in a similar proportion among several other measures to infuse liquidity in the system.

Especially considering the weak data of index of industrial production (IIP) released on Friday, the chambers have sought softened interest rates to augment demand.

“There is a need to reduce the repo rate too by 150 basis points at this juncture to attract inflows.

“Reduction in interest rates is absolutely essential in order to give a push to investments and employment which has taken a severe beating in the recent past. Such confidence-boosting measures are also important to bring the stock market to normal levels,” said the Federation of Indian Chambers of Commerce and Industry in a statement.

The Director General of the Confederation of Indian Industries, Mr Chandrajit Banerjee, said, “RBI’s move to reduce CRR by 150 basis points is in a positive direction, but today’s weak IIP data shows that the RBI should go further and reduce interest rates.”

The Chambers said that in view of the slowdown in growth and at a time when inflation is likely to decline to single digits with the global commodity prices easing, the central bank should reduce interest rates.

“Central banks across the world have started cutting interest rates in view of the crisis in global financial markets.

“This would provide an opportunity for the RBI to change its stance and start cutting interest rates,” the chambers said.

Welcoming the RBI move, the PHD Chambers of Commerce said that the cut in CRR to 7.5 per cent would pump Rs 60,000 crore of liquidity into the system.

More Stories on : Industry Associations | Interest Rates

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