Raghuram Rajan should cut rates, boost growth: CII

Lauding the pro-reforms approach adopted by RBI Governor Raghuram Rajan, industry body CII on Thursday expressed hope that the central bank would shift towards an expansionary monetary policy by cutting interest rates to stimulate growth.

"The pro-reforms approach adopted in the speech has sent a strong signal that the RBI would take significant steps to re-invigorate growth in the economy.

"We are certain that under his (Rajan's) leadership, the RBI would make a shift towards an accommodative monetary policy which in turn would spur investments and bring growth back," said CII President Kris Gopalakrishnan.

Dr Rajan, 50, addressed the media after taking over as the RBI chief on Wednesday. He announced a slew of measures, including more trade settlement in rupees to rescue the battered financial markets and hinted at a shift in focus from inflation control, doggedly pursued by his predecessor, to boosting growth.

Dr Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee.

"Reform initiatives suggested by the RBI governor, particularly that of financial inclusion, facilitating investment flows, promoting financial savings, addressing the depreciation of the rupee and rising inflation are timely and reflect an innovative approach to tackle the headwinds facing the economy and revive investor confidence," Gopalakrishnan said.