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"We believe this would certainly lend some support to the flagging industrial growth," said Naina Lal Kidwai, president of the Federation of Indian Chambers of Commerce and Industry, based in Mumbai. However, she said that commercial banks are unlikely to cut their own rates in a hurry, mostly because deposit growth of about 12.5 percent still lagged behind credit growth of 15-17 percent. "The key for industry is for lending rates by banks to come down, but this would happen only when banks are comfortable with deposits," Kidwai said. India's economy is expanding at its slowest pace in a decade, with gross domestic product predicted to grow as little 5 percent in the fiscal year ending March 31. That's down from 9 percent in early 2011, and it's paired with rising budget and current account deficits that have weakened India's currency. The government estimates the country needs at least 8 percent growth to create enough new jobs for the 13 million Indians entering the workforce each year. The finance minister last month unveiled a new budget aimed at trimming the budget deficit and attracting foreign investment.
[Associated
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