Further rate cuts likely: Kamath

With inflation coming down to single-digit level of 8.98 per cent, CII chief K.V. Kamath on Sunday said that key policy rates could be lowered to boost confidence of India Inc. and spur growth.

"Interest rates are still high. Inflation has fallen to a single digit. I think that would give confidence (to RBI) to roll back or signal drop in interest rate," he said while speaking at the India Economic Summit organised by the World Economic Forum and industry body CII.

The biggest challenge before the country, he said, was to keep the confidence level high amid global financial crisis, which has pushed the West into recession.

"I think India is in a distinctly different position. (The) challenge we have is (on) how we keep confidence in this global situation," said Kamath, who also heads ICICI Bank.

India, he said, was different because despite global recession it would continue to grow by around seven per cent in the current fiscal and the growth will not be less than six per cent during 2009-10.

Noting that in the next few weeks the Indian industry would have to work out strategies to meet the global challenges, he said, "What will drive the Indian economy will be the domestic market".

He further said de-leveraging, cost cutting and declining commodity prices would have a benign impact on economic growth.