Lower interest rates to boost economy: CII

23 January 2008

Mumbai: The Confederation of Indian Industry (CII) has sought a rate cut by the Reserve Bank of India (RBI) to strengthen domestic economic fundamentals against the backdrop of a 75 basis point cut in benchmark US interest rate by the Federal Reserve.

"With inflation under control and hovering around 3.0 per cent, it is the right time for the RBI to cut the repo and the reverse repo rates by 25 to 50 basis points," CII president Sunil Bharti Mittal said in a statement.

The two rates currently stand at 7.75 per cent and 6 per cent, respectively.

The suggestion followed major losses on the Indian stock market, which have fallen for seven consecutive sessions. The market fell nearly 13 per cent yesterday before ending the day down 5 per cent. The market staged a major recovery with the BSE Sensex gaining 864 points at close of trade today.

The Reserve Bank is due to review its credit policy on January 29.

The RBI had raised interest rate five times since June 2006, which has started impacting consumer goods sales and production of automobiles.