Worried over industrial slowdown and sluggish growth, Indian Inc asked the government on Tuesday to announce policy measures to boost manufacturing sector and urged the Reserve Bank of India to refrain from further hiking the key interest rates in its review of monetary policy later this month.
Industry chamber Confederation of Indian Industry said successive hikes in interest rates have had a dampening impact on industrial growth.
The RBI has increased its key policy rates 10 times since March 2010 to tame demand and curb inflation.
In May, the overall inflation rate rose to 9.06 per cent from 8.6 per cent in April.
"We hope that the RBI will take note and resist from raising interest rates again in its quarterly review of monetary policy scheduled on July 26," CII director general Chandrajit Banerjee said.
The industrial growth fell to 5.6 per cent in May this year from 8.5 per cent in the same month last year,
Federation of Indian Chambers of Commerce and Industry said this massive slowdown in investments in the past few months has affected the growth of manufacturing sector, besides other factors.
"The government should consider providing an incentive package and more importantly focus on creating conducive environment for reviving investments in the economy," Ficci president Harsh Mariwala said.
Growth in sectors like machinery and electrical machinery, which is an indicator of investments in the economy, has been negative implying that there could be further slowdown in investments in coming months, he added.
Assocham said the declining industrial growth directly affects overall output and employment scenario, besides aggravating supply-side shortfalls.
Therefore, the government needs to closely assess the situation and unveil a roadmap to fix the problem without any further delay, Assocham secretary general D S Rawat said.
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