RBI should cut rates to support economic growth: FICCI

New Delhi, Jan 23 (UNI) Reacting to the US Fed cut, industry chamber FICCI today said the Reserve Bank of India (RBI) should also follow suit and cut the interest rates to support the economic growth.

RBI should cut the repo rate by at least 25 basis points this month itself and then follow up with further cut of another 25 basis points within next two months, the industry chamber said in a statement.

''We have time and again reiterated through Ficci studies and surveys, the adverse impact that the high Interest rates have had on the growth of certain sectors of the economy especially in the SME segment,'' said Ficci President Koteshwar Dobhal.

Ficci's latest Business Confidence Survey, released in December 2007, showed that while initially the high interest rates affected the consumer goods industry, now even the intermediate and capital goods sectors are getting impacted.

The policy implication emerging out of the survey states that RBI must ease the monetary policy stance and slowly make it more accommodative. Failure to do this would send the industry into a downward spiral and make recovery particularly difficult.

''Now that the inflation is also down to tolerable limits, we do hope that RBI would re-look at the interest rates and some measures would be taken soon to move towards a soft interest rate regime,'' the Ficci statement said.

An impetus from RBI in the form of easy interest rate regime would help provide necessary impetus to the growth. The RBI must shift from its emphasis on controlling inflation to keeping growth going, it added.

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