Interest rates should be reduced to 7-8%: Kirit Parikh

Interest rates should be reduced to 7-8% to accelerate flow of funds in the infrastructure projects, said Planning Commission member Kirit Parikh on Friday.

There should be lower interest rates for infrastructure projects. It will stimulate growth of the economy, said Mr Parikh addressing mediapersons at a conference organised by industry body Ficci.

About 40% of the road projects, which were open for competitive bidding, did not receive bids due to high financing costs, he added. Though RBI has cut key lending rates by 400 basis points since October 2008, banks have not fully passed on the cuts to borrowers in the form of low interest rates so far. He added that lower rates are advisable considering the long-term inflation of 3-4%.