Rate cut not enough, need enabling environment for growth: HSBC

A slight improvement in industrial growth have raised hopes for a rate cut by RBI in its April 1 monetary policy

To spur investments, the country also needs an "enabling environment" besides reduction in interest rates, HSBC Country Head Naina Lal Kidwai has said.

"Interest rates are not the only reason why investment is not happening. We need a much more enabling environment for industry, for growth, and interest rates are one criteria which is a deterrent," Kidwai said on the sidelines of a water conservation conference here last week.

Retail inflation easing to a 25-month low of 8.1% in February and a slight improvement in industrial growth have raised hopes for a rate cut by RBI in its monetary policy scheduled on April 1 to boost economic activity.

Inflation fell to nine-month low of 4.68% in February due to easing prices of kitchen staples like onion and potato.

However, Kidwai said: "I think there will have to be a sustained performance on inflation before interest rates begin to come down. But at least it appears at the moment that interest rates won't go up".

Industrial output entered positive territory in January with a modest growth of 0.1% after contracting for three months in a row.