Cut interest rates to sustain industrial growth: Ficci

Apex industry chamber Federation of Indian Chambers of Commerce and Industry (Ficci) today pressed for a cut in interest rates by about 2.6 percentage points to sustain substantial investments made by companies for capacity additions and green field projects in the second quarter of 2009-10.

The chamber also suggested that the government should continue with the fiscal stimulus packages as corporate investments are on the rise and and demand has not climbed to the pre-slowdown levels.

"India Inc is stacking up substantial investments in capacity additions, modernisation and green field projects... To sustain this, Indian industry now wants an interest rate cut of about 2.6 percentage points," Ficci said in its business confidence survey in which 358 firms participated.

It said with the economy showing signs of a sustainable recovery, the Overall Business Confidence Index has increased to 72.4 per cent from 67.2 in the last survey.

Majority of the companies that participated have reported that the improvement seen in overall economic and industrial conditions over the last few months is expected to continue in the future," the survey said.

The survey also said that with the outlook for sales at the firm level improving, 65 per cent of the participating firms are expecting their sales volume to go up in the coming six months.

About 40 per cent have said that they would enhance their investment levels in the next six months and would largely focus on modernisation and expansion of facilities entailing expenditure on new plant and equipment.

"...It would be important that even the monetary policy variables are not tightened," it said.