Commerce Minister calls for 2 percent rate cut to boost manufacturing.

NEW DELHI: With appointment of second-in command to RBI Governor Urijit Patel as the new head of the apex bank, Commerce and Industry Minister Nirmala Sitharaman on Wednesday pitched for as much as 200 basis points, that is 2 per cent, interest rate cut by RBI to help the cash-starved MSME sector, However, she did not specify if it would be at one go or over a period of time.

“I still hold that the cost of credit in India is high. Undoubtedly, particularly MSMEs which create a lot of jobs contribute to exports... are all hard pressed for money and for them, approaching a bank is no solution because of the prevailing rate of interest. I have no hesitation to say, yes 200 bps, I would strongly recommend,” said Sitharaman.

RBI, which has maintained key interest rate at 6.5 per cent since April 2016 citing inflationary concerns, is scheduled to hold its next policy review on October 4. The policy will be presented by Urjit Patel, who will take charge on September 4.

Industry chambers like Confederation of Indian Industry (CII) have been pressing for interest rate cut to boost manufacturing and economy as a whole.

The minister also said,“It is time now for the Indian economy to have a breath of fresh air. The competitiveness of smaller companies is affected purely because of rate of credit,” adding that every sector approaching the commerce ministry is all for “access to affordable credit”.

Source : newindianexpress.com