Even as inflation hit a 40 month low of 5.96 per cent, industry body CII on Monday called for a 1 per cent cut in interest rates by the Reserve Bank of India (RBI) to attract investment and sought greater reforms to spur the economy.
CII's newly elected President Kris Gopalakrishnan told mediapersons that in order to put economic growth on a fast track, it is important that greater investments come forward.
Early implementation of Goods and Services Tax (GST) and Direct Tax Code (DTC) is also important, he added.
"The RBI needs to work in tandem with the Government in boosting growth by easing interest rates by at least 100 bps in the current fiscal. Steps like early implementation of GST would help in adding 1-1.5 per cent in the GDP," he said.
Concerned over stubborn inflation, RBI had been keeping a tight leash on its monetary policy. It cut its key rates after a gap of nine months in January this year.
Gopalakrishnan said supply side constraints is the main reason for inflation and reduction in interest rates would help in enhancing investments and increase in boosting capacity.
"There are certain things which we can do at the domestic level to boost economic growth. We can not do much (to improve) the external factors," he informed.
On GST, he hoped that the amended constitutional amendment bill will be placed in Parliament in the monsoon session.