High Interest Rates Among Biggest Drags On Corporates: Assocham

Business

oi-Sunil

By Sunil Fernandes

Published: Wednesday, August 5, 2015, 13:21 [IST]

India Inc. is surely disappointed with the RBI not announcing any cut in the policy interest rates, which have become one of the biggest drags on the balance sheets of the corporate, said Mr Rana Kapoor, President of the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

As the policy paper itself has highlighted, the Monsoon has progressed well and khariff sowing of several key crops like oilseeds, rice, pulses and coarse cereals has picked up quite well. Going forward, the food inflation, along with fuel, should further come down. In so far as the impact of Fed Reserve's action is concerned, even if the US rates rise, it has already been discounted, said Mr. Kapoor.

While RBI has read it well that the growth is picking up, it has conceded that the capacity utilisation remains quite subdued...This is because of lack of consumer demand, which needs to be pushed up by lesser costs of funds.

India Inc would like RBI to take full advantage of the cheap commodity prices, including of the fuel and go in for some bold moves in interest rates...that would have helped both ways- in reviving the consumer demand and de-leveraging the balance sheets, added Mr. Kapoor.

Mr. Kapoor further said, "Unfortunatley, it is a missed opportunity again!"

ASSOCHAM has been highlighting the need for creating conducive environment for investments, capacity creation and augmentation of industrial production on priority basis. ASSOCHAM opines that the policy must support creation of more production capacities and in ensuring adequate supply response on one hand and boost the demand growth on the other.

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