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'More liquidity & interest rate reduction required in system' - CII
12
Nov '08
CII notes a revival in IIP growth during September 2008 at 4.8% compared to August IIP growth of 1.4%. While September 2008 IIP growth is more, the overall IIP growth for first 6 months of 2008-09 at 4.9% compared to 9.5% during the corresponding period last year is an indication that we are experiencing decline in industrial growth, said CII in a press statement issued here today. A bigger concern is the secular decline in the three month moving average of IIP growth.

Consumer durables have shown revival in growth during April-September 2008-09 at 6.8% compares to –3.2% during the corresponding period in 2007-08. However, IIP growth in Manufacturing has declined to 5.2% during April-September 2008-09 from 10% during the corresponding period last year. Similarly, Capital Goods, Basic Goods, Electricity and intermediate goods have shown significant decline in growth, CII noted.

“The industrial growth numbers during the first half of 2008-09 clearly point towards need for further action on interest rate reduction. The RBI has shown agility in reducing the repo rates from 9% to 7.5%, however, the current IIP growth numbers call for further cut in repo rates by at least 150 basis points”, said Mr Chandrajit Banerjee, Director General, CII.

Further, a cut in SLR by additional 2% and CRR cut to the regulatory level of 3% will help bring in liquidity in the system and along with a repo rate cut of 1.5% would help banking lending to industry, said CII.

Confederation of Indian Industry

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