Industry slams RBI move to increase rate

The Reserve Bank’s move to increase short-term rates has not gone down well with industry chambers and real estate players. Industry representatives said the continuing tight monetary stance from the central bank has dampened the economic growth rate but failed to tame inflation.

Confederation of Indian Industry (CII) Director General Chandrajit Banerjee said: “CII hopes that this was the last increase in rates amid growing signs of a slowdown in economic and investment activities in the country.” Banerjee said inflation was supply driven and can be addressed by announcing and approving large projects, increasing investment demand and combating bottlenecks in supply.

ASSOCHAM President Dilip Modi said RBI’s measures will further slow down fresh investments and restrict industrial growth. “High input prices, rising finance costs and global uncertainties are adding to negative sentiments and high interest rates will further put brakes on investments, which will make it difficult to maintain the growth momentum.”

PHD Chamber President Salil Bhandari said despite the continuous rise in policy rates, inflation still persists, while manufacturing is growing at a slow pace. “Stickiness in the domestic inflation vis-à-vis high international commodity prices coupled with wage rate revisions have generalised the inflationary expectations and dampened the growth prospects.”

Real estate developers, hit due to high borrowing costs, were also critical of RBI’s stance. Pradeep Jain, Chairman, Confederation of Real Estate Developers’ Association of India (CREDAI) said: “Over the past one year, RBI has embarked on a highly ambitious inflation management objective by raising key rates consistently but the results cannot be seen yet.”