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Q.

India's industrial production growth rate slowed to just 0.1 per cent in July---news. Is it not a reflection of weak economic activity in the country? Will it prompt RBI to cut interest rate in its next policy review? Your views?

Tags: india, money, rbi
Asked by Good Citizen, 12 Sep '12 01:31 pm
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Answers (5)

 
1.

If Industrial production index could have registered an upswing had interest rates been cut, the RBI would have done it last policy review itself. The RBI had reiterated that credit squeeze or cash crunch is not the sole reason for falling IPI in India. Various factors including some prevailing in foreign countries, also contribute to this slowing down of industrial production. We all complain of galloping inflation. And credit squeeze is one of the methods employed by RBI to arrest the run away inflation.We have to see adversities in its proper perspectives.
Answered by thampy chacko, 12 Sep '12 02:15 pm

 
  
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2.

Till the various reforms are not carried out, infrastructure not improved and agriculture remains sick things will remain like this.
Answered by Vikram, 12 Sep '12 01:45 pm

 
  
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3.

The country is going to dogs. There is no fresh initiative from the Govt. on economic front. Various reforms are pending. Coalition partners are behaving in the most irresponsible way. Its a lame duck Govt.
Answered by kishore malhotra, 12 Sep '12 01:38 pm

 
  
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4.

RBI is very often doing it.

Yes , Economic activity is very weak in our country.

This is due to corruption -

Bad Economic Policy

Improper administration.
Answered by anantharaman, 12 Sep '12 01:34 pm

 
  
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5.

People don't have money in their hands. Interest rates are high, one of the reasons why auto sales have dropped like a bomb in August. Companies have held back capex programmes due to the high cost of borrowing. If you need to kick start the growth angle or increase consumption, money has to be available to companies or people at cheaper rates that acts as an incentive to make that investment. RBI is sitting on this inflation angle for too long. They have been at it for the past 18 months with something like 12 rate spikes and inflation hasn't shown any real cooling off. Forget about the common man's inflation. That is just going up. So, if RBI again becomes rigid on this aspect, they will do nothing or make a small 0.25 change that would mean nothing or tinker with the Repo rate or reverse repo rate. I feel, nothing less than a 100 basis points reduction in interest rates is going to make things easier.
Answered by Omega, 12 Sep '12 09:35 pm

 
  
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