New Delhi, Mar 26 (UNI) Federation of Indian Export Organisation (FIEO) today asked the Reserve Bank of India (RBI) to take a cue from the US Fed which is aggresively cutting down interest rates and bring Indian rates in alignment with these.
In a statement, FIEO President Ganesh Kumar Gupta said exports will be hit if the cost of credit is not brought down at the earliest.
Mr Gupta took note of the Fed bringing down 75 basis points to 2.25 per cent recently and said Indian interest rates need to aligned with global realty.
The FIEO Chief elaborated that the high cost of credit was already impacting the credit offtake and sectoral indices.
In the first eleven month of the current financial year 2007-08, credit offtake of commercial banks has increased by only 16.7 per cent as against 22.6 per cent in the same period last year.
The figure so far is substantially short of TBI's projections of 24 per cent credit growth in the current fiscal 2007-08.
As far as the sectoral growth is concerned, growth rate of industrial products in January, 2008 slumped to 5.3 per cent from 11.6 per cent in the previous year, manufacturing declined to 5.9 per cent.
''Inflation itself has shown no signs of relenting with food prices and oil prices on an all time high and is much beyong five per cent,'' he said.
Mr Gupta stated that in such a scenario, the RBI should consider an immediate reduction in the cost of credit to ensure that the various sectors of the economy are brought back on the growth track.
UNI MP SR RK2118