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Our Bureau

Chennai, Nov. 17 The monetary measures taken so far are not enough, said Mr N.S. Venkatesh, Managing Director, IDBI Gilts, a top primary dealer.

He said that the RBI needs to cut the cash reserve ratio (CRR) and repo rate more aggressively.

The RBI has already effected a 350-basis-point cut in CRR and a 150-basis-point cut in repo rates during the past two months.

Mr Venkatesh said CRR can be cut further from its current level of 5.5 per cent to the statutory floor of 3 per cent. Only this would help banks improve their margins and prevent them from taking high cost deposits. Further, repo rates should also be cut to 6 per cent, he said.

Asked about fiscal steps, Mr Venkatesh said the Government may have to consider cutting taxes – especially for industries offering huge employment potential, so as to curb any labour unrest. He felt that the restoration of special incentives and tax breaks such as investment allowance and extra depreciation would encourage the corporate sector to invest more in capital goods.

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