New Delhi, Oct 10 (UNI) Expressing concern over the weak IIP data, which showed a paltry growth of 1.3 per cent in August 2008 as against the robust figure of 10.9 per cent during the same month last year, the industry bodies today called for a Further reduction in CRR and Repo rate to improve the industrial production.
Reacting to the falling industrial production and extremely poor performance that India's infrastructure sector recorded during April-August(2008-09), Assocham President Sajjan Jindal said,''Very high rate of credit, higher input costs and continuing stumbling blocks in infrastructure have jointly contributed to it.'' A further cut in CRR is called for as also repo rate needs to be brought down substantially to infuse adequate liquidity in the market, he said.
Meanwhile, Ficci President Rajeev Chandrasekhar said, ''The impact of global events on an already declining IIP trend is bound to be significantly negative and the only way to ensure that no permanent or significant damage is caused to the current economic cycle and to slowly but surely restore the economic growth momentum and IIP, is to make significant moves now, including deeper CRR and repo rate cuts.'' ''...the RBI should have an open mind and should be in a position to release greater liquidity in the system as and when the situation demands so,'' he said.
Keeping in mind the manufacturing data, which slumped to a low growth rate of 1.1 per cent in August 2008 as compared to 10.7 per cent growth rate in August 2007, Ficci also suggested that the Government should immediately consider the implementation of the recommendations of the Group constituted by the Prime Minister for the manufacturing sector.
In view of the slowdown in growth, CII said, ''It is time for the RBI to change its monetary policy stance. A hawkish stance is no longer appropriate in the current situation where growth is clearly being sacrificed.'' Welcoming the RBI's move to reduce CRR by 150 bps, it said keeping in view today's weak IIP data, the Central Bank should go further and reduce interest rates.
UNI SG AK AS2018