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Various Indian industry bodies came together echoing a large voice of togetherness and called in unison for a rate cut next month by the Reserve Bank of India as official data showed that the annual inflation rate based on wholesale prices continued in the negative territory in June, falling further to (-)2.4 percent from (-)2.36 percent in May.
PHD Chamber of Commerce and Industry Alok B.Shriram said: "Subdued wholesale price inflation will help manufacturing sector in terms of increased price cost margins vis-a-vis decreased cost of raw materials."
"The near static price line and benign inflation outlook should propel the RBI to continue with its rate easing cycle in its forthcoming monetary policy to support investment and consumption demand especially as industrial production has recorded a muted performance and the consumer goods sector has moved into the negative terrain in May," Confederation of Indian Industry director general Chandrajit Banerjee said in a statement in New Delhi.
Regarding pulses and onions that continued to remain costly, Sriram said the "government needs to check the rising prices of pulses and take adequate steps in advance so that prices of pulses are in comfortable trajectory in the coming times."
"We urge the RBI to reduce the repo rate at least by 50 basis points in the forthcoming credit policy and another 100 points by end 2015", he added.
FICCI president Jyotsna Suri said: "There is a critical need to firm up industrial growth. We hope that the Reserve Bank would maintain its accommodative stance in the third bi-monthly statement for 2015-16 to be announced next month."
"In fact, industry would like to see a deeper cut in the policy rate and its equivalent transmission by the banks in the form of lower lending rates," she said in a statement.
Welcoming the downtrend in WPI, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said that a long term sequential drop in inflation of manufacturing products does not augur well for manufacturers as it could adversely impact their pricing power.
"With prices seemingly under control, the central government and the Reserve Bank of India (RBI) should focus more on boosting the economic growth," said secretary general D.S. Rawat.
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