New Delhi: A day after new RBI Governor Raghuram Rajan took charge, Minister of Heavy Industries and Public Enterprises Praful Patel today expressed hope that the RBI chief would cut interest rates to improve credit flow to put economy back on high-growth path.
"RBI has also started on the right note. If it considers a little bit of reduction in interest rates, there will be more liquidity. I think that will be useful for the growth of the industry," said Patel.
He was speaking at Automotive Component Manufacturers Association (ACMA) annual convention here.
Besides slowdown in the economy, high interest rates are affecting the industry, he said.
"Interest rates have always been a cause of concern for our country and especially for the middle-class when they are buying white goods and cars. The EMIs are linked ultimately to the rates and therefore higher interest rates certainly in a slowing economy makes a case for a relook at it," he added.
Rajan rescheduled by a few days the date of his much-anticipated first monetary policy statement to September 20.
He assumed charge amidst extremely difficult pressures on the external front which are resulting in rupee getting badly battered.
The new Governor set up a number of committees for revising and strengthening monetary policy framework, financial stability, financial inclusion, NPAs and an outside panel of experts headed by former Governor Bimal Jalan to screen applications for new bank licenses.
Talking about the auto sector dependence on energy sector, Patel said, the country has not invested enough in the area of energy and the auto industry is highly dependent on it for its requirements.
"We have not invested enough in energy sector and auto sector is dependent on it. High fuel prices have affected automobile industry adversely," he said.
Further, the minister said, the sector and the economy as a whole are going through a tough phase.
"There have been slippages in the past. Many of the problems in our country have been self-inflicted, besides oil prices or the other issues of higher imports vis-a-vis the exports. We have made many mistakes or rather not tried to correct some of the things and slippages took place," he said.
"I think we lost too much time in that. But not that with standing, I think there is a renewed sense of urgency within our own government. I see a lot more decisions being taken and over a period of time, we will see certain improvement in sentiment and improvement in market conditions," he said.
The minister said the industry and the government need to work together to address the issues.
"We have to acknowledge that it is not going to be an overnight journey. But notwithstanding, I am sure that collectively all of us putting our heads and minds together - industry and the government - can try to solve these issues," he added.