Addressing a press conference here last night, Mr Jindal said India Inc. had taken a ''heavy hit'' in the past six weeks due to the global financial meltdown. Stressing the need to infuse liquidity into the system, Mr Jindal said ASSOCHAM was receiving reports from all segements of the Indian industry that banks were still scared to lend. Reacting to the RBI's Annual Review Policy, announced two days ago, Mr Jindal said the central bank should have reduced the Repo Rate by 100 basis points and brought down Cash Reserve Ratio (CRR) to six per cent.
In the long run, the RBI should lower the CRR to the 2004 level of 4.5 per cent and bring down the Statutory Liquidity Ratio (SRL) by two to three per cent, he added.
Stating that all leading business chambers, including ASSOCHAM, would be meeting Prime Minister Manmohan Singh in the first week of November, Mr Jindal said the crux of the discussions would be how to stimulate growth in the industry.
ASSOCHAM would seek a monitoring cell in the RBI to keep track of bank lending to industries. It would also propose the setting up of a sovereign fund with a corpus of at US$ 25 billion to support the equity of well run Indian listed companies and mutual funds.
However, he expressed optimism that the sound fundamentals of the Indian economy and proper regulatory mechanism on financial institutions would help the economy to achieve a GDP growth of 7.5 to 8 per cent.
This was largely due to a robust agriculture growth, which was expected to touch seven per cent this year. Industrial growth however would be around five per cent, he said.
Stating that a reduction in interest rates would not have an impact on inflation, the ASSOCHAM president said prices were already going down due to the drop in crude and commodities prices.
Inflation was likely to go down to seven to eight per cent by the end of the financial year.
Asked about the beating taken by the sensex, he hoped that things would begin to improve on the stock markets from December.
While the 25 per cent depreciation in the Rupee should have helped exporters, the slowdown in the global economy and the reduced demand had resulted in Indian exports being hit, he said.