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High interest rates holding back investments: Ficci chief

High interest rates holding back investments: Ficci chief

Blaming high interest rates for the companies holding back investments, leading industry body Ficci’s new President Jyotsna Suri Tuesday said the RBI and the government need to shed their “confrontationist approach” and sit together to address the issue.

Suri said there is an urgent need to cut the interest rates by as much as 1-2 percent.

“He (RBI Governor Raghuram Rajan) really needs to relent a little. He has to (cut rates) to give impetus to investments. We need to boost our investment cycle. We cannot do that at this rate of interest. The government and the RBI have to sit together and collaboratively come out with a solution which will rejuvenate the investment cycle,” Suri told PTI in an interview here.

Suri, who took over as Ficci President earlier this week, said that the RBI and the government “can not hold agitated position against each other and the time for being confrontationist is not there”.

In its last monetary policy meeting on December 2, the Reserve Bank decided to keep the policy rate unchanged for the fifth time in a row, but hinted at softening of its stance “early next year” if inflation continues to abate and there is an improvement in fiscal health.

The decision to keep the short term lending (repo) rate unchanged at 8 percent has disappointed the industry which said Rajan in his fifth bi-monthly policy statement could had been more accommodating to help prop up the sagging economy.

Suri, who is also Chairperson and Managing Director of the Lalit Suri Hospitality Group, said that low rate cut would not help and the RBI should consider reducing the rates by 1-2 percent.

She said that 25 basis points would not help and “it has to be a reasonable amount anything between 1-2 percent will be fine”.

On Goods and Services tax, the new President said that early roll out of GST would help in boosting economic activities in the countries.

However, she said that the government should not fix high tax rates.

“We are hoping that it (should be) a prudent number. It should not end up being a 27 or 30 per cent or something like that….that will be a killer,” she added.

Aimed at creating a single tax for goods and services across the country, government on December 19 introduced the long-pending GST Bill in the Lok Sabha for roll-out of the new regime from April 2016 subsuming various levies like entry tax and octroi.

Touted as the single biggest indirect taxation reforms since independence and a “win-win” for Centre and states, the 122nd Constitution Amendment Bill for Goods and Services Tax (GST) was tabled by Finance Minister Arun Jaitley after extensive discussions to get states on board by addressing their concerns.

A GST sub-committee has suggested to peg the single tax rate at almost 27 percent under the proposed GST regime.

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