The Reserve Bank of India should pause its interest rate hikes as the deceleration in industrial growth is now clearly apparent, with both consumer and capital goods segments showing sluggish growth, Mr B. Muthuraman, President, Confederation of Indian Industry, said.
He was reacting to the Index for Industrial Production numbers. Industry performance in July-August 2011-12 is estimated at around four per cent compared with 7.2 per cent in the year-ago period.
The RBI has hiked the key policy rate, repo rate, by 350 basis points since September 2009.
The Punjab, Haryana Chamber President, Mr Salil Bhandari, said there was need to ensure credit availability to industry at reasonable rates and moderation in input costs. GDP growth in the second quarter of 2012 may fall below 7.5 per cent, he said in a release.
The Federation of Indian Chambers of Commerce called for reversal of some of the monetary tightening measures to stimulate domestic demand.
“The growth in consumer goods sector, especially consumer durables, is much below expectations, especially so in the festive season,” said Mr Harsh Mariwala, President, FICCI.
He said “Investment demand has also been affected in the last few months as indicated in the negative growth of machinery which was -1.8 per cent in April-August 2011.We expect the growth in industrial sector and investments to be low in coming months as the impact of rising cost of credit would continue.”