India Inc expects cut in repo rate: Survey
Updated: Sep 28, 2015 12:08:06pm
New Delhi, Sept 28 (KNN) Indian industry is expecting Reserve Bank of India to cut interest rate between 25-50 basis points when it reviews the repo on September 29, in the wake of continued deflation on WPI for the tenth month in a row, said a survey.
According to a survey by ASSOCHAM, the inflation based on the Consumer Price Index (CPI) was also at a record low of 3.66 per cent in August- over two percentage points lower than the RBI’s January 2016 target.
“Continuing its deflationary trend, which shows how the pricing power with the manufacturers has been curtailed, the WPI inflation plunged to a historic low minus 4.95 per cent in August, though helped by the cheaper global commodity rates,” it said.
The report said that the growth in several interest sensitive sectors like real estate, construction, automobile, consumer durables and non-durables has been sub-optimal, crying for a build-up of a market demand.
With the exception of pulses, onion and a few vegetables prices of other food items have remained benign, reflecting squeezing of the consumer demand that in turn discourages investment in various sectors of the economy, it said.
The chamber noted that industrial production decreased 0.4 percent in August after increasing 0.9 per cent in July. Thus there is a strong case for a rate cut.
It said the RBI has been rather conservative and remained too much focused on inflation while growth in the industrial production, infrastructure and services is required for a real push to economy.
The chamber said other area which is highly job oriented is the merchandise export sector which remains in a shambles. The exporters must also be supported by a lower interest rate regime.
It does not expect the exports to go beyond USD 268 billion in the current fiscal as against USD 310 billion, it added. (KNN Bureau)
According to a survey by ASSOCHAM, the inflation based on the Consumer Price Index (CPI) was also at a record low of 3.66 per cent in August- over two percentage points lower than the RBI’s January 2016 target.
“Continuing its deflationary trend, which shows how the pricing power with the manufacturers has been curtailed, the WPI inflation plunged to a historic low minus 4.95 per cent in August, though helped by the cheaper global commodity rates,” it said.
The report said that the growth in several interest sensitive sectors like real estate, construction, automobile, consumer durables and non-durables has been sub-optimal, crying for a build-up of a market demand.
With the exception of pulses, onion and a few vegetables prices of other food items have remained benign, reflecting squeezing of the consumer demand that in turn discourages investment in various sectors of the economy, it said.
The chamber noted that industrial production decreased 0.4 percent in August after increasing 0.9 per cent in July. Thus there is a strong case for a rate cut.
It said the RBI has been rather conservative and remained too much focused on inflation while growth in the industrial production, infrastructure and services is required for a real push to economy.
The chamber said other area which is highly job oriented is the merchandise export sector which remains in a shambles. The exporters must also be supported by a lower interest rate regime.
It does not expect the exports to go beyond USD 268 billion in the current fiscal as against USD 310 billion, it added. (KNN Bureau)
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