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CII calls for need to cut key interest rates to push growth

Industry lobby CII Monday wanted a cut in the key interest rates of the Reserve Bank of India, saying the rates were too high for long-term economic growth and said the country needed to return to a 8-9 percent growth path.

Contending that increasing interest rates acted as an anathema to investments, CII president S Gopalakrishnan said the country needed to rope in investments hampered by the high interests. He also called for giving a thrust to infrastructure development and advocated power and land reforms.

While extolling the RBI for doing a "good job" by enforcing monetary control for reigning in volatility, Gopalakrishnan said: "The interest rates are too high for long term growth."

"We feel the cash reserve ratio (the share of deposits banks must keep with the central bank) should be reduced by 100 basis points. The repo rate (the rate at which the RBI lends money to commercial banks) should be cut by 75 basis points," he said.

He said the growth could be muted in the next few years. "We need to return to the eight to nine percent GDP growth. For this we need investments. There is a sense of urgency."