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04-04-2012, 09:50 AM #1
Slowdown fuels clamour for RBI rate cut
Fearing a further slowdown in the manufacturing sector and prospects of subdued growth, India Inc in its pre-monetary policy consultations with the Reserve Bank on Tuesday pressed for reduction in interest rate by at least half a per cent.
Raising concerns of slowing investment, industry body Assocham demanded that the RBI in its annual monetary policy on April 17 should cut benchmark interest rates by 0.5 per cent.
The meeting, chaired by Reserve Bank Deputy Governor Subir Gokarn , was attended by representatives of different industry chambers, including Ficci and experts.
ICRA Managing Director & CEO Naresh Takkar said that investment has slowed down and liquidity in the system is very tight.
"We are seeing slowing down. We gave inputs on asset quality and it is a matter of concern. Things are challenging... going forward unless we do something, things are not going to improve," Takkar said.
Hiranandani Group MD Niranjan Hiranandani said the government should at least incentivise small home buyers in the wake of high interest rates.
"The EMIs have been very destructive for the purpose of buying homes. Industry bodies have asked for CRR cuts to bring more liquidity in the market," Hiranandani said.
Assocham President RN Dhoot expects rate cut in the forthcoming policy review.
"I think, they (RBI) will reduce the rate of interest. They listened to our demands carefully and seemed to be positive. RBI did not argue that they will not reduce (the rates)," Dhoot said.
L&T CFO Shankar Raman said: "We had to tell the RBI how the cost of funds is going up. I am being realistic enough and not expecting a rate cut in April."