RBI should consider easing monetary tightening measures: CII

Mumbai, July 29 (UNI) Appreciating rupee and high interest rates is expected to slow down investment flow in the country which would reduce the pace of economic growth, Confederation of Indian Industry (CII) said today.

CII suggested that in the wake of moderating inflation, the Reserve Bank of India (RBI) should consider easing the monetary tightening measures introduced earlier to maintain the pace of economic growth of the country.

The Chamber pointed out that tightening of monetary policies has also lead to about two per cent decline in non-food credit offtake during April-May and during the same period negative impact has also been seen on the export business of the country.

Non-food credit has reduced to Rs 18,41,656 crore from Rs 18,82,392 crore during the April-May period. Total bank credit has also declined. This trend is a cause of concern on economic expansion and growth, CII said in a statement here today.

Pointing out that RBI's measures to moderate inflation have not been conducive for accelerating growth the chamber said, ''RBI must consider easing the interest rates such that industry is encouraged to carry on with their expansion plans.'' It said that as economic growth in India is still investment-led, continuing with monetary tightening measures is expected to impact investment rate and thus bring down the growth momentum.

UNI