Need more steps to ease liquidity squeeze, says demand-recession hit India Inc.

However, according to industry lobby groups, this was not completely unexpected but cautioned that despite low inflation rate the common man as well as private corporate sectors continued to suffer due to liquidity squeeze.

According to Federation of Indian Chambers of Commerce and Industry (FICCI) president Sarsh Pati Singhania, the latest inflation data is not "entirely unexpected."

"The fact that WPI has come down to 0.44 percent on a year on year basis despite prices of food articles going up by 7.3 percent on a year-on-year basis shows that inflation in case of other products has declined significantly. The high base effect also has a role to play in this case as inflation stood at 7.78 percent during the corresponding week of the previous year," Singhania said.

"Looking at the weekly variation in the price indices, we see that prices of primary articles, both food and non-food products, have indeed moderated," he said, adding that "the fall in prices in the case of primary articles is largely supply driven as reports from different parts of the country show that market arrivals for different agricultural products have been reasonably good."

However, the beneficial effects of low inflation rate are yet to be enjoyed by the common man, Singhania said.

"What is particularly worrisome is that given the present inflation rate and the interest rates being charged by banks, the real rate of interest in the economy is at double digit levels," he said.