India needs to get back to 8-9 per cent economic growth by attracting investments that have been choked by the high interest regime, CII said today. "Rising interest rates are counter-productive and they discourage investments," CII president S Gopalakrishnan told a press conference here.
"RBI has done a very good job in containing volatility with its monetary controls. But for long term economic growth he interest rates are too high," he said. For that, CRR should be cut by 100 basis points and repo rates by 75 basis points, he said, adding that inflation is a cause for concern owing to supply side constraints.
Gopalakrishnan said the GDP growth during 2012-13 had hit a decadal low of five per cent. "Growth in the next few years is likely to be muted. We need to go back to the eight to nine per cent GDP growth for which investments are necessary as there is a sense of urgency," the CII president said.
He added that the implementation of the Goods and Services Tax (GST) itself will add 1.5 per cent to the GDP straightaway. CII also advocated land and power sector reforms, and a big push to infrastructure development.