Wholesale inflation has fallen to a negative 2.65% for the month of April as against -2.33% in March. Naturally, India Inc has renewed its demand that Reserve Bank of India (RBI) cut interest rates citing conducive environment.

Wholesale inflation has been in the negative territory for the past six months. It was at -2.33%, -2.17%, -0.95%, -0.50% and -0.17% in the months of March, February, January, December 2014 and November 2014, respectively.

Jyotsna Suri, President, FICCI, said, "The IIP growth for March 2015 has slowed down over the previous month, which indicates that a firm turnaround is yet to take place. We look forward to another round of downward revision in the repo rate and subsequent transmission of same by the banks to encourage on-ground investments and build on the growth momentum.”

source: tradingeconomics.com

The industry has been asking that the RBI bring down interest rates so that borrowing money to fund expansion projects becomes easier.

The Index of Industrial Production (IIP), that was announced by the Ministry of Commerce and Industry on May 12 came in at 2.1% as against 5% for the month of February.

source: tradingeconomics.com

In the manufacturing sector alone, only 13 out of 22 industries showed a positive growth in the month of March.

Chandrajit Banerjee, Director General, CII, said, "The benign inflation outlook, fuelled by soft commodity prices and the anti-inflationary policies of the government, should provide sufficient elbow room to the RBI to continue with growth inducing policy in its forthcoming monetary policy announcement."

What the RBI will have to keep in mind is the El Nino prediction. The Indian Met Department has already said monsoons this year are going to be below normal.

This increases the chances of a higher food inflation going forward.

Suri said,"Slight upside risk does persist on account of unseasonal rains and possibility of below normal monsoons. We are sure that the state and central government agencies will make all efforts in balancing demand and supply and addressing structural bottlenecks to control rise in food prices due to any such exigencies."