India's business community calls for interest rate cut to boost economy

Source: Xinhua| 2017-10-02 20:54:36|Editor: liuxin
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MUMBAI, Oct. 2 (Xinhua) -- The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged India's central bank to further cut interest rate to restore the country's economic growth.

The call came just days before the bi-monthly monetary policy meeting of the Reserve Bank of India which is slated for Oct. 4.

India's economy is facing serious challenges against the backdrop of the demonetization and the reform of goods and services tax, the government needs to take measures to restore economic growth, the FICCI noted.

The FICCI also called on the government to expand its fiscal deficit. The budget deficit for the fiscal year 2017-18 is 3.2 percent of GDP.

"Fiscal deficit target can reach 3.7 percent ... so you can wisely invest money in infrastructure, such as roads, electric power, railway and port," a FICCI official said.

A recent report, citing data from Kotak's institutional shares, noted that weak investment demand, which accounts for 30 percent of GDP, poses a bigger "structural" challenge.

The report added that investment demand has been subdued for quite some time in the country.

India's current investment, exports and credit growth are all low, said D Subbarao, who previously served in India's central bank, adding that in such circumstances the economy is hard to grow at 7 percent.