Ahead of the Reserve Bank of India's (RBIs) monetary review policy, Commerce and Industry Minister Anand Sharma on Monday made a strong pitch for lowering interest rates to tackle increasing slowdown in the industrial sector and give a fillip to the economy.
“We are of the considered view that interest rates for investment for industry should be lowered. We have taken up the issue with the Finance Minister who is receptive and positive, particularly for small and medium enterprises,” Mr. Sharma told journalists on the sidelines of SAARC Business Summit organised by Federation of India Chambers of Commerce and Industry (FICCI) here.
The Commerce Minister expressed the hope that the RBI would take a considerate view as the economy needed infusion of funds and more investment for keeping inflation under control.
The RBI is scheduled to review its short-term lending rates on Tuesday. The RBI had hiked interest rates by 375 basis points between March, 2010 and October, 2011 to deal with the persistently high inflation, including rising prices of food items. However, general inflation fell to a two-year low of 7.47 per cent in December, 2011. Food inflation stood at (-) 0.42 per cent as of January 7. Industrial production grew by 5.9 per cent in November 2011 as against 6.4 per cent in the same period a year-ago. But it showed a bounce-back in November as compared to October 2011 when the factory output decelerated 4.74 per cent.
Mr. Sharma said in today's environment, industry needed investment. Cost of credit needed to be brought down.
On the giving of Most Favoured Nation (MFN) status by Pakistan to India, the Minister said everything was on track and it would be a reality in due course.
Addressing the gathering, Ranjan Mathai, Foreign Secretary, called for making SAARC region a magnet of regional co-operation, business and growth. Historical economic integration reinforced by the geographical commonality was a facilitating factor, he added. He sought focus on thrust points such as reduction of non-tariff barriers, building a regional chain of production built on factor advantage, institutional linkages with the SAARC and changes in the policy measures to facilitate enabling environment to the interest of each other.
