Industry chambers push for rate cut as July inflation eases to 6.87%

With inflation numbers showing signs of tapering off, apex industry chambers on Tuesday asked for rate cut.

Wholesale Price Index-based inflation stood at 6.87 per cent for July against 9.36 per cent in July last year. The inflation rate was 7.25 per cent in June.

Assocham President Rajkumar N. Dhoot said: “This provides a window of opportunities to bring down interest rates. A rate cut is further warranted because of the slowdown in industrial output as revealed in IIP figures given out last week.”

CII too pushed for a rate cut hoping that the declining trajectory of inflation would encourage the RBI to revisit its monetary policy stance.

“As is evident, core inflation continues to be stable and inflation related to food prices is supply driven and not due to excess demand,” it said in a statement.

The chamber has cautioned against weak monsoon which could lead to spike in food prices and called for tackling the supply side bottlenecks to improve agricultural productivity.

“We need to delist perishables from APMC Act, permit farmers to sell their produce in the open market and open up FDI in retail, which would improve the productivity of agriculture and lead to a further decline in inflation,” CII said.

R.V. Kanoria, President, FICCI, further underlined the need for easing the monetary policy regime given that even the food prices have declined from 10.8 per cent in June 2012 to 10.1 per cent in July.

“The time now is to pep up investments and simultaneously address supply side constraints,” Kanoria said.

heena.k@thehindu.co.in

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