ICICI Bank managing director & CEO Kundapur Vaman Kamath who is also president of Confederation of Indian Industry (CII) has said ?If inflation continues to remain in the country at the present levels, the demand for goods and services could slacken as interest rates could be used as a tool to tackle the inflationary scenario. Although industry in the last fiscal has performed very well contrary to my expectations, it does not mean we have no challenges to face ahead. ?
Kamath had expected that the corporate profitability to come under pressure in the fourth quarter of the last fiscal year.
Addressing the media in Mumbai on Thursday, he said that government will necessarily resort to fiscal, monetary and also the supply side measures to control inflation.
?The global situation prevailing on oil, food and commodity fronts is not favorable to us currently. Nobody knows as to when the global situation would improve. We will thus have to take various measures to tackle the inflationary situation domestically and maintain growth. Also, the proposed $700 billion worth investments in India itself is expected to act as a stimulant in the country?s growth. I presume, we are going to grow at around 8.6% in future,? he added. Kamath said that interest rates in India would move in tune with policy decisions. ?After the two successive increases in cash reserve ratio (CRR) in the recent past, we still see the credit off-take not matching liquidity inflows.? ?The liquidity is presently comfortable in India. And to me it?s a key signal on interest rate movements.On the fiscal front so far as I see, it is basically indicating certain actions from the government. These actions will have consequential impact. I would think that industry hears and restores to these signals and it will implement whatever measures are required,? he said.