FICCI seeks lower interest rates to kick-start investment

FICCI said that RBI's steps are good enough to check the slide in rupee and inflation, but certainly not enough to bring down interest rates

The Federation of Indian Chambers of Commerce and Industry (FICCI) today pleaded for lower interest rates to the industry in order to kick-start investment, which is badly needed in the country. 

 

The steps taken by Reserve Bank of India (RBI) are good enough to check the slide of the rupee and inflation, but certainly not enough to bring down the interest rates, Naina Lal Kidwai, President, FICCI said.

 

“I would like to believe that interest rates would stay stable in the backdrop of the fear that they could go up. We would hope that it could have come down further. But, I think the reality suggests that in the current environment, actions RBI is taking would not be possible to bring down the interest rates,” she said.

 

 

Addressing a press conference after the National Executive Committee meeting of FICCI, here, she said from the industry perspective lowering of the interest rates was essential. “Efforts taken by RBI have worked in stemming the downward slide of the rupee. Our fear now is that the interest could go up. We are fortunate that the RBI has stopped at the level of putting in the LAF limit and the penalty therein, which has the effect of basically reducing the liquidity in the system. But fortunately, stops short of actually putting interest rates up. This measure could push interest rates up, but it is stops short of putting the repo rate up,” she said.

 

The industry is looking forward to the monetary policy on July 30 and believes that with inflation and rupee under check would ensure that interest rates would not go up further, she said.

 

“Actually, our hopes of lower interest rates have certainly receded. The RBI has taken many baby steps in bringing interest rates down. The transmission of that to industry has not been felt. Our banks lending at lower rates is what industry needs. That transmission from RBI policy to banks has not happened. And there are many reasons for that. We need lower interest rates in order to be able to kick-start investment, which is badly needed in the country,” Kidwai added.