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The Government has indicated that any reduction in interest rate will be possible only if the rupee strengthens.
This issue came up for discussion during a meeting called by Prime Minister Manmohan Singh with industry captains here on Monday. Industry asked for immediate rate cut and demanded that the Government give priority to reviving investment and industrial growth.
The meeting was called to get industry leaders’ views on stabilising the rupee and moderating the impact on trade and industry, besides measures to correct the current account deficit and push industrial growth.
The meeting was attended by Infosys Chairman N. R. Narayana Murthy; Reliance Industries Chairman Mukesh Ambani; Wipro Chairman Azim Premji; Bajaj Auto Chairman Rahul Bajaj; Bharti Enterprises Chairman Sunil Bharti Mittal; Hero MotoCorp Joint Managing Director Sunil Munjal; FICCI President Naina Lal Kidwai; CII President Kris Gopalakrishnan, and AssochamPresident Rana Kappor.
Naina Lal Kidwai said, “Be it fiscal policy, monetary policy or the structural reforms route, all these have to be used in tandem to lift business sentiment and create a environment where investors feel confident about their investments”.
“Moreover, with the slowdown becoming more discernible, fresh hiring is already taking a hit. Layoff of contractual staff has already started and this could soon move to permanent employees. Unless the growth trajectory is reversed, we will be facing a grim employment scenario,” she said.
Assocham President Rana Kapoor said the country can lower its Current Account Deficit by incentivising higher financial savings. Banks and Post Offices should be allowed to offer inflation-linked small saving instruments. “These could be an extension of existing instruments such as small savings accounts, RDs, PPFs, etc., with a regular interest reset clause. Also, removal of TDS or offering tax reduction on interest income on bank deposits could prove beneficial,” he said.
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