The S&P downgrade of US debt and the possibility of a double-dip recession accompanied with anaemic growth in Europe and Japan has weakened global commodity prices.

This will reduce pressure on domestic prices, said industry chamber FICCI, seeking a rate cut by the Reserve Bank of India.

The apex bank's focus should now shift from minimising risk of continued inflation to conserving the growth momentum, it said in a statement.

The Reserve Bank may be emboldened by the US Federal Reserve's stance of keeping the interest rates unchanged at exceptionally low levels (0-0.25 per cent) at least through mid-2013.

The slowdown in industrial growth is all pervasive, with both investment demand (capital goods growth at a measly 1 per cent during April-May 2011 vis-à-vis 49.8 per cent in the like period previous year) and consumer demand (consumer durables goods growth at 7.9 per cent during April-May 2011 vis-à-vis 27.7 per cent in the like period previous year) being hit.

To sustain investor interest in the India growth story and give a strong signal to the investor community, the RBI would do well to boldly cut interest rates, said FICCI.

  

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