The government should adequately address the serious constraints faced by the industrial sector owing to escalating input costs and infrastructure inadequacies. This was critical to permanently control inflation and spur the growth momentum, said the Tamil Nadu Chamber of Commerce and Industry.

While hailing the lowering of repo rate and cash reserve ratio by the Reserve Bank of India, with the objective to arrest decelerating growth momentum, the senior president of the chamber, S. Rethinavelu, said in a statement that more effective steps were required. However, he felt that the rate cut would ease the liquidity crunch faced by banks.

The RBI had increased key policy rates several times since March 2010 to contain inflation without much success. Higher cost of funds had been consistently restricting economic growth. It was an impediment for the Indian business and industry to compete on equal terms with their counterparts in international markets. The revised policy rates would obviate, to a certain extent, the high cost factor and stimulate industrial and export growth.

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