Disappointed over GDP growth slumping to decade's low of 5% in 2012-13, India Inc on Friday said the situation is grim and asked the Reserve Bank to cut interest rates to boost economic expansion.
Industry body CII said with no visible pick-up in any key levers of the economy "the situation remains grim". While the fiscal deficit situation will not allow government expenditure to go up, every means need to be explored for raising consumption and investment demand, it said.
"CII has been advocating further easing of the monetary policy with a reduction in repo rate and cash reserve ration (CRR)," CII Director General Chandrajit Banerjee said.
Ficci said "low growth in the last fiscal, though anticipated, brings in disappointment and is the least in almost 10 years".
"Gradual signs of turnaround are visible and a growth in the range of 6.0-6.5% seems attainable this fiscal. The monsoons are expected to be normal and this is definitely a positive signal to begin with," Ficci Secretary General A Didar Singh said.
Assocham said GDP growth which has fallen below 5% in fourth quarter of 2012-13 and growth touching a decade's low of 5% for the entire fiscal are strong indications that the turnaround of Indian economy is still far away.
There is a real reason for worry, requiring drastic measures from the government and RBI to cut rates, it said.
The RBI is scheduled to announce its mid-quarter policy review on June 17. In its last review, the Reserve Bank had cut the key interest rates by 0.25%.
Pulled down by poor performance of farm, manufacturing and mining sectors, economic growth slowed to 4.8% in the January-March quarter. The GDP growth was decade's low of 5% for the entire 2012-13 fiscal.
In 2011-12, India's economic growth was at 6.2%.
Assocham President Rajkumar Dhoot said while revival is going to be a long-drawn process unlike in the case of 2009, manufacturing revival is critical for the revival of services sector and employment generation.
"The Cabinet Committee on Investments (CCI) has been looking at clearing tranches of Rs. 1,000 crore plus projects, however, a similar thrust is required for projects at the state level..., Banerjee said.