Industry pitches for more rate cuts as WPI remains negative

With inflation continuing to be in the negative zone, India Inc Monday pitched for further easing of policy rates during the current year by Reserve Bank.

Industry chamber CII said going forward, the prospects of normal monsoon along with subdued global commodity prices and favorable government policies should restrain upside pressures on inflation.

Read more from our special coverage on "WPI"

• Wholesale prices drop for 17th straight month, contract 0.85% in March
• Wholesale prices drop for 16th straight month

"This should provide the space to the RBI to retain the dovish stance towards monetary policy and open up the door for further easing of policy rates during the current year," it said in a statement.

Ficci said the pressure, which was seen arising from the food segment seems to be moderating, with prices of vegetables and fruits reporting a decline.

Further, recent meteorological prediction indicates expectation of normal rainfall this year which is a huge positive.

"Current inflation trajectory combined with positive monsoon forecast provides enough room for further accommodation in the policy rates which is critical for reviving the capex cycle in the economy," it said.

Continuing the deflationary trend for 17th month, WPI inflation was (-)0.85 per cent in March, but may inch up gradually in the coming months on growing pressure on food and vegetable prices.