Interest rate hike to further dampen growth momentum: ASSOCHAM

Successive rate increases by the central bank since March last year have not been able to control inflation, which is currently hovering above 9 per cent, Associated Chambers of Commerce and Industry of India (ASSOCHAM) President Dilip Modi said here.

At the same time, official statistics show cement sales and steel imports have dipped, while inventories of automobiles are piling up, Modi said. "High input prices, rising finance costs and global uncertainties are adding to negative sentiments," he added.

"All these factors in a high interest rate environment will most certainly put the brakes on new investments and put corporate India in a difficult position to maintain the growth momentum," he said.

Modi said as the national economy seems poised for a downward swing, the only silver lining is 15 per cent higher advance tax payments by companies during April-June, 2011, compared to the corresponding year-ago period.