As the inflation is at its 10-month low, it is time the Reserve Bank of India (RBI) takes measures to ensure that the interest rates are reduced irrespective of the tools it may choose to use, says industry body Assocham.
AS RBI takes up a half quarter review of its credit policy tomorrow, Assocham's president Rajkumar Dhoot said, it should weigh on its mind that the WPI inflation is certainly showing signs of de-celeration and is set to come further down. On the other hand, the surprise jump in the industrial growth has come about on a very low base.
In October 2011 the industrial growth was minus five per cent. "To say that 8.2 per cent expansion in October 2012 is a great turnaround will be in self-deception. The fact is that the industrial production in October this year is only a shade better than what it was in 2010. We are somewhere around 2010," Dhoot said in a statement.
The industry body said that enough of the policy tightening has been done in the past over two years and a lot of economic growth has been sacrificed. "The RBI can choose either a drastic CRR cut or reduction in the repo rate to send a strong message among the banks that the interest rates are softening”.