‘High interest rates hurting manufacturing growth’

The Reserve Bank of India (RBI) needs to significantly lower interest rates to revive investments and boost manufacturing growth, the National Manufacturing Competitiveness Council said Friday.

“Representatives of industry were of the view that a significant lowering of interest rates by the RBI was essential for the revival of investment at the present juncture,” said an official statement after the first meeting here of the newly-reconstituted NMCC.

The RBI, in its third quarter review of the monetary policy for the current fiscal last month lowered cash reserve ratio (CRR), the amount against deposits which commercial banks have to keep as liquid assets such as cash, by 50 basis points but kept key policy rates unchanged after hiking it for 13 times in two years.

The first meeting of the newly-reconstituted National Manufacturing Competitiveness Council, headed by V. Krishnamurthy, took place at Vigyan Bhawan here.

Other members of the council include Tata Group chairman Ratan Tata, ITC chairman Y.C. Deveshwar, TVS Group chairman Venu Srinivasan, Planning Commission member Arun Maira and finance minister’s chief economic advisor Kaushik Basu, among others.

The commission discussed the issues affecting manufacturing sector with Commerce and Industry Minister Anand Sharma.

“The first meeting was centred on how to attain the objective of 12-14 percent manufacturing growth rate envisaged in the National Manufacturing Policy,” the statement said.

The easing of regulatory burden on manufacturing specially for the small and medium enterprises was also essential for competitiveness. It was agreed that this should be given utmost priority, it said.