India Inc Seeks Rate Cut To Boost Investment

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NEW DELHI – India Inc has suggested increasing competitiveness and boosting domestic investments to counter the current global turmoil.

Following the interactive meeting with the Prime Minister today on economic challenges, Jyotsna Suri, president, FICCI, said, “India has both demand and supply — a large young workforce and ample natural resources. We must push our global competitiveness in the current environment. While we should continue to market India as an attractive investment destination under the ‘Make in India’ campaign, it is equally important to encourage domestic investments”.

Some of the suggestions made by FICCI president in the meeting include a cut in interest rates as the domestic investment is sluggish because of lack of demand and high cost of capital. Reduction in interest rates will kick-start both consumption and investment, she said.

FICCI has also suggested setting up of a National Asset Management Company that could take over large NPAs would release lendable resources and also help in reducing lending rates.

Terming the interaction with the Prime Minister as productive with substantive outcomes, Sumit Mazumder, president, CII, said, “The Prime Minister encouraged industry to explore opportunities in the context of unfolding global economic conditions and offered all support.”

India benefits in terms of lower global commodity prices but would increasingly have to rely on domestic demand for sources of growth.

Mazumder said the two biggest issues are reviving demand and introduction of GST for adding economy-wide competitiveness. “It is important that India does not get clubbed with other emerging economies. India’s economic fundamentals and current performance are superior to its peers”, he added.

Assocham president Rana Kapoor said there is a room for monetary easing to the tune of 75-125 basis points over the next 7 months. Since industrial sector accounts for 45% of outstanding bank credit while it has a lower share of 28% in GDP, there is an urgent need for investment revival through a strong dose of monetary easing, he added.