The government should cut excise duty and interest rates to boost demand and help industry tide over the current economic crisis, CII president and ICICI Bank chief executive K V Kamath has said. He also sought a downward revision of interest rates, by a further 200 - 300 basis points, to ensure easy access to funds and boost consumer spending.

The demand for a blanket cut in rate of excise duty,  which comes for the first time in several years, is a clear indication that the industry is bracing for difficult times ahead.

Finance minister P Chindambaram, in his first term as finance minister, had taken similar measures on the tax front to accelerate growth. Similar initiatives are now warranted on the indirect tax front as well, said Kamath.

Indirect collections in the country registered a drop last month and the government's response to the demand for excise duty cuts in this backdrop remains to be seen, he added.

The CII president had projected a GDP of 7-7.5 per cent in FY08 but it could be down to 6 -7 per cent.
 
According to Kamath, the industry is currently engaged in assessing the impact of developments of the last few months. He said the current crisis is somewhat unprecendented given the sharp corrections in commodity prices and steep falls in oil prices. The west and India are both in correction mode, he observed.

Kamath further added that the overwhelming consesus at a meeting attended by CII officials was in favor of continuing ongoing projects and not shelving them.