IIP down, pressure on RBI to cut rates

Jun 13, 2012 - Pawan Bali |

Age Correspondent

India’s industrial production growth has come to a standstill, with factory output expanding by just 0.1 per cent in April.

Finance minister Pranab Mukherjee said the government will soon take steps to give “positive signals” to industry.
Due to poor industrial growth there is now increased pressure on the Reserve Bank to cut interest rates further at its meeting on June 18.
All eyes are, however, now on the May inflation data to be released on Thursday. Any sharp drop in prices will allow the RBI to go in for an aggressive rate cut.
Inflation at 7.23 per cent in April is way ahead of the RBI’s comfort zone. There is a division within both the government and the RBI, with many saying that the central bank’s primary responsibility is to curb inflation and not to boost growth. Any increase in inflation will make it difficult for the RBI to cut interest rates sharply.
Mr Mukherjee said Tuesday: “I am disappointed. Industry has not yet picked up. Negative sentiments are there... We have to take steps to give positive signals.”

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