RBI should pause rate hike: Assocham President

The economy growth, especially the sectors like real estate and automobiles, has been impacted by the cumulative 2.5 percentage points hike in policy repo rate in less than a year, and thus the Reserve Bank of India (RBI) should not tighten the monetary policy further, the industry body Assocham said on Tuesday.

“We feel that time has come for a pause,” said Assocham President Ajay Singh urging the RBI not to go for more hike in interest rates.

Singh, who is also the chairman and managing director of SpiceJet, said the RBI should halt any more hike in the lending rates in the wake of uncertainties in the global business environment.

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“We feel the economy has reached a saturation point beyond which it may be difficult to absorb any more rate hike. Rate sensitive sectors like real estate including residential complexes, passenger cars, commercial vehicles may see negative impact of the rate hike,” he added.

The Monetary Policy Committee of the RBI is widely expected to hike policy repo rate by 25 basis points on April 6. The RBI has already increased the repo rate by 2.5 per cent or 250 basis points since May 2022.

“So far, the RBI has responded well to the external rate hike without pressing any panic button. However, a 250-basis point increase in the policy rate since May last year, has started exerting pressure on the consumers as also corporations,” Assocham Secretary General Deepak Sood said.

Highlighting the challenges to the economy, Singh said though India remains the fastest growing nation amongst the major economies, the growth is uneven even as the global headwinds from volatile energy prices, geo-political developments and threat of recession in major economies need to be watched with abundant caution.