Rate hike to affect industrial growth: Assocham

NEW DELHI, INDIA: The RBI’s move to hike interest rates by 25 basis points will further slow down fresh investments and industrial growth, industry body Assocham (The Associated Chambers of Commerce and Industry of India) said on Friday.

Successive rate increases by the central bank since March 2010 have not been able to control inflation which, at 13-month high, is currently hovering close to double digits, said D.S. Rawat, secretary general, Assocham.

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“High input costs amid global economic uncertainties — especially in the Eurozone — are adding to negative sentiments,” he said. “Global commodity and oil prices have remained elevated due to easy monetary policies of developed nations that boosted liquidity in global markets.”

He added that all these factors in a high interest rate environment will most certainly put brakes on new investments and put corporate India in a difficult position to maintain the growth momentum. 

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“The national economy seems poised for a downward swing,” he concluded.