New Delhi: Industry chambers reacted unanimously to the Reserve Bank of India’s hike in the cash reserve ratio and repo rates stating that it could impend growth.
The Confederation of Indian Industry said, “These are expected policy responses to inflation, though it may have been possible to await the lagged effects of the last round of monetary actions in June 2008 before taking these further steps.”
It further said, “While many sectors are operating at close to full capacity and are planning capacity expansions, increase in interest rates could impact the investment momentum and corporate cash flows.”
Expressing similar concern, the Federation of Indian Chambers of Commerce and Industry stated, “Due to higher CRR, there will be a further squeeze on credit availability and projects that are already slated may get shelved. While some investments may no longer be viable given the risen interest rates, some others will be taken off the drawing board due to non-availability of adequate funding.”
According to the PHD Chambers of Commerce and Industry, the impact could also be felt in disbursals of agriculture loans at a time when there was an urgency to increase production of agricultural commodities to contain inflation.
