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Mr Venu Srinivasan

Our Bureau

New Delhi, March 31 The newly elected President of the Confederation of Indian Industry, Mr Venu Srinivasan, has said that real interest rates continued to be much higher despite inflation nearing zero. He said that borrowing cost in certain areas continued to be at the same level when inflation was at its peak.

“Real interest rates are much higher. We are still borrowing at 12-13 per cent, the same rate when inflation was at its peak. On two-wheelers, interest rates are still at 22-23 per cent,” said Mr Srinivasan addressing a press conference after taking over as CII President. Mr Srinivisan said that CII saw a further scope of reduction in interest rates in tandem with falling inflation. At the same time, he expressed concern over the high Government borrowings, which prevented interest rates from softening.

“If the Government keeps borrowing, bond yields will remain high. At some time, the Government will have to decide to monetise it. Otherwise, even if repo and reverse repo rates come down, interest rates may not come down,” he said.

The CII, as a part of its agenda in the current fiscal, would have three focus areas – revival of the economy, growth in infrastructure and advocacy for good corporate governance. The apex chamber is planning to release its new code on corporate governance in the next three weeks.

Mr Srinivasan also said that the chamber would seek expansion of trade ties with Latin America and Africa. It would try to obtain relaxations in the H1-B visa criteria and actively oppose protectionist policies.

Mr Srinivasan, who is also Chairman of TVS Motor Company, did not mention any specific areas in which he would lobby for the auto sector in his capacity as CII President. But he did express his concern over the drop in financing vehicles by the banks. Responding to a query, he said, “Banks are not lending to the two-wheeler industry. This is because repossession norms are not finalised.”

More Stories on : Industry Associations | Interest Rates | Economy

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