India Inc may ask for rate rates as inflation slips

India Inc said today that the Reserve Bank must cut the benchmark rate as inflation has slipped to (-)4.95% in August. This would help supplement economic growth.

"Given that CPI inflation has also been declining, RBI needs to reduce interest rates sharply to drive a recovery in demand," CII Director General Chandrajit Banerjee said. "CII expects RBI to reduce interest rates by 50 basis points in the forthcoming policy with statements supporting further easing in the near future."

Inflation has been slipping for the 10th month in a row, India Inc has been pressurizing RBI to cut interest rate.

"Under the present circumstances, it would be most appropriate for RBI to give weight to growth considerations and announce a deeper cut in the policy rate. We hope RBI and the banking community will coherently work towards lowering of lending rates," Ficci President Jyotsna Suri said.

The wholesale price index (WPI) based inflation was (-)4.05% in July. It has been in the negative zone since November 2014. In August 2014, inflation was 3.85%.

Image credit: Indiatimes