New Delhi: India Inc has started putting pressure on the government to cut key policy rates. Almost all industry bodies are having consensus on cutting key policy rates to fuel up the economic growth. 

Associated Chamber of Commerce and Industry of India (ASSOCHAM) and Federation of Indian Chambers of Commerce and Industry (FICCI) have requested Reserve bank of India (RBI) to cut key policy rates by 50-100 basis points during the mid-quarter review of the monetary policy.

FICCI said that the need of hour is for some strong policy actions so as to reverse the slowdown in economic growth. The decline in India's economic growth rate would have a huge bearing on prospects for employment generation, it added. Hence, any further delay in bringing down the key monetary policy rates by RBI could prove to be critical for the country's growth trajectory. FICCI would like to see a cut of 50 basis points in Cash Reserve Ratio (CRR) and 50 basis points reduction in repo rate in the next policy review.

According to ASSOCHAM, despite cut in CRR by 50 basis points in the past, major industrial projects have been impacted seriously due to non availability of funds, high lending rates and liquidity tightening policy by the RBI. It is the need of hour to make arrangements for fund generation. To improve the situation, RBI needs to make cut in CRR by 100 basis points in the coming review. ASSOCHAM has also held rising cost of interest rates responsible for the recent economic slowdown.

It is important to note that according to the recent data of the government, economic growth rate has declined to its lowest level in last 3 years. Manufacturing sector has suffered most whose output is largely dependent on key policy rates. It is expected that RBI will take decision on cutting key policy rates to prop-up the economy.

(JPN/Bureau)