An interest rate cut, at a time when demand was not showing any sign of revival, would boost sentiments, especially for interest-rate sensitives like the car and real estate sectors, which had been showing negative growth, a majority of the 15 CEOs polled by Business Standard said.
“This is the time for interest rates to come down as this gives a signal to industry to spur investments,” said DLF Executive Director Rajiv Talwar.
February statistics show car sales have been falling consistently, with market leader Maruti Suzuki’s declining nine per cent in the month.
Hyundai’s sales were also down, by 7.6 per cent in the month, while Tata Motors’ fell 70 per cent.
Also, the Economic Survey 2012-13 projected the inflation rate would cool to 6.2-6.7 per cent by this month-end. So, corporate leaders said, this might be the right time to cut rates.
“If the economy has to kickstart, there should be 50-100-basis-point cut in interest rates over the next six to nine months. I don’t believe such a rate cut initiation would really flare up inflation.
To bring investment cycle back in the country, a rate cut is the need of the hour,” said Mundra Power CFO Prabal Banerji.
“We are confident that an interest rate cut will encourage companies to invest more; consumers will buy more cars and homes, increasing the demand for cement and steel,”
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