The Confederation of Indian Industry on Monday called for reduction of interest rates by 100 basis points, or 1%, in the current fiscal year by the Reserve Bank of India (RBI) to boost investment and economic growth.
“It is important to reduce interest rates to make cost of credit affordable while improving ease of doing business,” said CII’s new president Kris Gopalakrishnan, who is also the co-founder and co-chairman of Infosys Ltd.
Gopalakrishnan, while addressing the media, said that the implementation of goods and services tax (GST) would help push gross domestic product (GDP) growth by 1-1.5%.
According to the industry body, the GDP growth for 2013-14 is likely to be 6-6.4%. However, Gopalakrishnan said that India must try and get back to a growth path of 8% and above at the earliest.
The industry body underlined that 85% of the country’s GDP growth is driven by domestic factors and in spite of uncertainty in the global economy, it is possible to achieve a growth rate of 6-6.4%, provided the government revived stalled projects and the central bank reduced interest rates.
Gopalakrishnan underlined the need for the government to allow foreign direct investment (FDI) in critical sectors such as banking, insurance, and pension funds.