New Delhi: Reeling under severe credit crunch, the Indian industry today welcomed the RBI decision to cut CRR rate by another 100 basis points but said the government and the central bank need to take more steps such as slashing interest rates to restore market confidence.
While welcoming the RBI’s move, apex chamber FICCI said there was a need to cut the repo rates by 150 basis points as well.
“Reduction in interest rates is absolutely essential in order to give a push to investments and thus to employment and demand, which has taken a severe beating in the recent past,” FICCI said in a statement.
Such confidence boosting measures are also important to bring the stock markets to normal levels, it added.
Expressing similar views, Assocham President Sajjan Jindal said, “It was high time that the Central bank should also consider reducing the benchmark lending rate to ensure adequate liquidity in the system.”
He said if such a measure was not taken infrastructure projects would be severely affected.
Jindal also said though these measures were long overdue, “however, the action should not be taken as a ‘panic signal´, as non-performing assets of the banks are even lower than two per cent”.
Stressing that the fundamentals of the economy were strong, he said investors in the stock market should not panic and the country has well regulated and tested regulatory mechanism in place.