CII wants RBI to cut interest rates by 1% this fiscal

The Confederation of Indian Industry on Monday sought a 100 basis points (1 per cent) reduction of key interest rates by the Reserve Bank of India in the current fiscal year to push up investment and economic growth.

"We would like to see a 100 basis point decrease in interest rates. Investments will automatically increase if the interest rates come down," said CII president and Infosys co-founder Kris S Gopalakrishnan.

''It is important to reduce interest rates to make cost of credit affordable while improving ease of doing business,'' he added.

Gopalakrishnan, addressing the media, said that the implementation of the proposed goods and services tax (GST) to replace the current plethora of indirect taxes would help push gross domestic product (GDP) growth by 1-1.5 per cent.

According to CII, the GDP growth of 6-6.4 per cent is achievable. Gopalakrishnan said that India must try and get back to the 8 per cent or more growth path at the earliest.

The industry body underlined that 85 per cent of the country's GDP growth is driven by domestic factors; and in spite of uncertainty in the global economy, it is possible to achieve a growth rate of 6-6.4 per cent provided the government revives stalled projects and the central bank reduces interest rates.

Gopalakrishnan underlined the need for the government to allow foreign direct investment (FDI) in critical sectors such as banking, insurance, and pension funds.

The CII said in order to clear the roadblocks in infrastructure development, an independent PPP (public-private partnership) commission with authority and jurisdiction to renegotiate terms of contract and access to financing, along with an effective dispute resolution mechanism, are required.

It also asked the government to address coal and gas shortages in the power sector, besides accelerating exploration for these fuels and their production in the country.

The CII also underlined the need for independent regulatory authorities in sectors with limited resources like coal, real estate and health.