The industrial chamber FICCI has blamed the RBI''s tight monetary policy and rise in interest rates for slowdown in industrial production. The tight monetary policy stance by Reserve Bank of India (RBI) has led to a decline in demand in the economy. This slowdown in demand has in turn affected industrial growth, said Federation of Indian Chambers for Commerce and Industry (FICCI) in a study on slowdown in industrial growth and its policy implications. It also said that apart from rising interest rates, the appreciation of the rupee has also taken a toll on industrial performance.
With industrial growth slowing down to a dismal 3 per cent in March 2008 against 14.8 per cent in the same month last year, FICCI suggested to RBI for reducing the interest rates to arrest the industrial slowdown. The downward revision in the interest rates would help in stimulating demand in the economy and ease the cost pressure on manufacturing sector and would lead to a sustainable solution through expansion of capacity that in turn would ease the supply constraint, the chamber said.
With industrial growth slowing down to a dismal 3 per cent in March 2008 against 14.8 per cent in the same month last year, FICCI suggested to RBI for reducing the interest rates to arrest the industrial slowdown. The downward revision in the interest rates would help in stimulating demand in the economy and ease the cost pressure on manufacturing sector and would lead to a sustainable solution through expansion of capacity that in turn would ease the supply constraint, the chamber said.
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