While the 6% plus rate of inflation during the period January to April 2007 warranted for monetary tightening measures to contain inflation, the current levels of inflation at 4.37% is well within the acceptable limits set by RBI and hence there should be no further monetary tightening measures, CII opined.
As economic growth in India is still investment led, continuing with monetary tightening measures is expected to impact investment rate and thus bring down the growth momentum.
RBI must consider easing the interest rates such that industry is encouraged to carry on with their expansion plans. Moreover, the appreciating rupee and high interest rates have eroded the profit margins of the exporting units especially those engaged in textiles & apparels, leather & leather products and marine food processing.
While the Government has revised the DEPB rates and the duty drawback scheme in favor of exporters, bringing down the interest rates will go a long way in helping these exporting units manage during these difficult times.
Confederation of Indian Industry
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