Goldman likely wrong on rate call: Montek

Goldman Sachs Group Inc analysts are likely to be proven wrong on forecasting 3 percentage points of interest-rate increases in India this year, Montek Singh Ahluwalia, the deputy chairman of the Planning Commission said.

“300 basis points is quite a huge increase but certainly I don’t expect that kind of increase to take place,” Ahluwalia said in an interview when asked about Goldman’s call. He added that a narrowing budget deficit will help restrain any rise in corporate borrowing costs.

The Reserve Bank of India is forecast by Goldman, HSBC Holdings Plc and Citigroup Inc to start raising its benchmark short-term rates by the conclusion of the next meeting on April 20. Projections for an accelerating expansion in Asia’s third-largest economy have prompted officials to withdraw fiscal and monetary stimulus adopted during the global crisis. India’s currency has appreciated more than 6 per cent against the dollar in the past six months, in part on expectations for higher rates as economic growth strengthens.