India Inc urges govt to cut repo rate by up to 1% point

India Inc on Friday urged the Reserve Bank to cut its short-term lending rate, repo, by up to 1 percentage point in the forthcoming monetary policy review.

New Delhi: India Inc on Friday urged the Reserve Bank to cut its short-term lending rate, repo, by up to 1 percentage point in the forthcoming monetary policy review.

To ease liquidity situation, the Reserve Bank today slashed cash reserve ratio (CRR), the portion of deposits banks are required to keep with the central bank, by 0.75 percentage point, a step that will infuse Rs 48,000 crore into the economy.

Welcoming the RBI's move to ease liquidity by reducing CRR, industry body Ficci said: "The RBI should cut repo rate by about 25-50 basis points in the next review".

Echoing views, CII said the liquidity deficit over the past few months has been running at a much higher level than required by the RBI for inflation control.

"The RBI should go ahead and cut the repo rate in the March review by 50 to 100 basis points, given that inflation has moderated over the last two months. This will give the required boost to growth and investment in the economy," it said.

Assocham said interest rates should also be slashed to stimulate fresh investments.

"Many industrial projects have been impacted seriously due to non-availability of funds and high lending rates," Assocham Secretary General D S Rawat said.

PTI