CII wants 'out of the box' intervention from RBI with 100 bps rate cut

New Delhi: On the eve of RBI's monetary policy announcement, industry body CII pitched for an "out of the box" intervention in the form of a 100 basis points cut in the key interest rate to spur private sector investments.

The six-member Monetary Policy Committee headed by RBI Governor Urjit Patel on Tuesday started deliberations as industry and the government hope for interest rate cut to spur growth which fell to a 3-year low of 5.7 per cent in the June quarter.

"I strongly recommend that there should be a 100 basis points rate cut. We need out of the box thinking. We all talk that the private sector investments should come in and we want the economy to pick up on a high growth trajectory," CII Director General Chandrajit Banerjee told PTI here.

Banerjee further said there has been an increase in capacity utilisation but "the animal spirit really kicks in when you are near about 80 per cent in terms of capacity utilisation and we see a trend moving towards that."

The fourth bi-monthly monetary policy statement for 2017-18, to be released tomorrow, is being keenly awaited by all stakeholders, especially the industry which has been demanding lower interest rates.

Bankers, however, are of the view that the Reserve Bank of India (RBI) would maintain status quo as inflation has risen. According to an SBI report, the RBI is likely to maintain status quo on key lending rate as it is "stuck in a conundrum"
of low growth, mild inflation and global uncertainties.