Mumbai, Jan 24 (PTI) A day prior to the Reserve Bank''sthird-quarter monetary policy review scheduled for tomorrow,Union Commerce and Industry Minister, Anand Sharma, said anyrise in interest rates would hinder industrial growth.
"Inflation is definitely a cause of concern. But itcannot be curbed by increasing interest rates. Instead, forthe development of industry and growth of the economy, thereis a need to provide easy credit to the industrial sector,"Sharma told reporters on the sidelines of an event organisedby the CII here today.
The Reserve Bank is widely expected to raise keyshort-term rates tomorrow to rein-in inflation.
There is a need to allow capital inflows and easy creditflow for the growth of economy, he said.
"For a clear growth of the economy, there is a need forcapacity addition. Foreign capital inflows and making crediteasily available for the industrial sector by public sectorbanks will ensure robust industrial production," Sharma said.
Cutting exports would only lead to cutting economicgrowth and not inflation. "This will result in job loss," hesaid.
On the Government''s policy on foreign direct investment(FDI) in retail, Sharma said, "we are actively consideringallowing FDI in the retail sector. We have received inputsfrom stakeholders and investors and (now) have to formallyfinalise the issue." .
Currently, India allows up to 51 per cent foreign investment in single-brand retail but has so far resisted anymove to open-up multi-brand retail.
"We want FDI for creating a complete value-chain withinvestments being made majorly in developing back-endinfrastructure. We expect 50 per cent of the investments to bemade in the rural areas for development of robust back-endinfrastructure that would ensure job creation," he said.
The Government is likely to sign economic partnershipagreements with Japan and Malaysia next month, he said.
"We look forward to concluding free trade agreement withthe European Union and next month we will be signing economicpartnership agreements with Japan and Malaysia," Sharma added.