CII pitches for 0.50% cut in lending rates

Industry body CII today pitched for a 0.50% cut in lending rates from the Reserve Bank in its monetary policy review next month to boost domestic investments.

"RBI must look at 50 basis points (0.50%) cut and over the next fiscal we look at 100 basis points (1%). There is a possibility of further rate cut and we are very positive (about it)," CII President Kris Gopalakrishnan told reporters here.

RBI will announce monetary policy for 2013-14 on May 3.

Setting the agenda for 2013-14 as accelerating economic growth through innovation, transformation, inclusion and governance, CII President said the country could achieve 6.5% growth this fiscal and it could go up to a level of 8-9% in next two to three years.

"Country's GDP has significantly come down (last fiscal)... Our top priority is to look at achieving 6.5% growth in current fiscal and 8-9% in next two to three years," said Gopalakrishnan, adding that the economic growth could only address issues, including job creation, current account deficit (CAD), etc.

Stating that the revival of economy is imperative, Gopalakrishnan termed the rising CAD as a major challenge before the country which could have negative impact on economic revival ahead.

"CAD continues to be on high side due to declining exports... CAD is the key worry we have," he said.

CAD exceeded 5% of GDP in the first nine months of April till December 2012, he said.

Asked about CII's agenda for next Lok Sabha elections, Gopalakrishnan said the CII will present the industry's requirements to various political parties to get them included in their election manifestoes for their action.

"We do not know when the next (Lok Sabha) elections (are) but they are due in next May. Our stand is to put together a set of requirement of the industry and we plan it to take up with different political parties to get included in their manifestos. We also want to invite political leadership to address our members," he said.

However, he said that the industry wanted that the major tax reform which is implementation of GST must happen.

Asked about slow progress on insurance, land reforms by the Centre, CII President said, "We cannot change the past."

However, he said that the Centre had taken a lot of decisions in the last six months, including clarification on reterospective amendment in Income Tax and setting up of Cabinet Committee on Investments for stalled projects, etc.