Interest rate regime should be growth oriented: CII

New Delhi, Oct 29 (UNI) On the eve of the half yearly review of the Monetary Policy by the RBI, scheduled for October 31, 2006, industry chamber CII today said the Central Bank needs to take a balanced view of the interest rate regime in the country, keeping in mind the need to make it growth oriented.

The current economic parameters are well within healthy limits of a fast growing economy and added that the current creeping up of the WPI at 5.26 per cent and a potential interest rate response should be seen in the light of domestic and global developments.

The M3 grew by 18.5 per cent today, higher than the projected rate of 15 per cent and more than expected growth in money supply could be attributed to a higher than projected GDP growth of 7.5 to 8 per cent by RBI, resulting from sustained high growth in manufacturing and services sectors.

The US interest-rate outlook has looked benign in recent months, amid fears that there could be further slowdown in overall growth in the world's largest economy.

''On the other hand, the Indian economic performance has been robust in the first quarter and the trends in corporate performance gives us optimism about Q2 growth figures as well,'' said CII President R Seshasayee.

The year on year (YoY) growth in bank credit till September-end has come down to 29.7 per cent against 35.9 per cent a year earlier.

Rise in interest rates earlier this year and also the hikes in repo and reverse repo rates, however, seem to have made some impact by slowing down the credit off-take.

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