The Associated Chambers of Commerce and Industry suggested to the Reserve Bank of India on Monday to take measures to contain inflation and maintain interest rates at the existing level so that the 8 per cent plus GDP growth target is not compromised.
In a memorandum to RBI, ahead of its Quarterly Monetary Review Policy on Tuesday, Assocham said maintaining a balance between the rising interest costs and high cost of money, at the same time making sure that the growth of the economy is not affected would be a difficult task for RBI Governor Y V Reddy.
However, this could be done provided a measured approach is adopted in the review policy so that inflation is contained without substantially
While high commodity price, particularly that of crude oil, have created supply side inflationary pressures, a judicious mix of fiscal and monetary measures, has also been able to contain inflationary expectations to a large extent.
However, these measures should be further enhanced, as with demand remaining strong in the domestic economy, return of pricing powers with manufacturers could result in high inflation going forward, it said.
There should be a supportive environment to encourage new investments in the core sector, particularly in neglected areas of infrastructure development. Resource flow including long term funding to productive and green field projects should also be enhanced, Assocham President Anil K Agarwal said.
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