India Inc faults policy stance

Disapproving RBI’s tight monetary policy to curb inflationary expectation, CII cautioned that with the “steady” rise in lending rates companies would find it difficult to fund investment activity in the coming years.

High interest costs at a time when global interest rates remain low, will also make Indian companies globally uncompetitive, CII warned.

The RBI’s rate hikes, which began in March 2010, have had affected industrial growth which has slowed down in the current year, CII pointed out.

Ficci said RBI’s action in raising policy rates, “though expected”, would adversely affect growth prospects.

“Series of hikes in repo and reverse repo rates have had a visible impact on the industrial production numbers, which have decelerated substantially in recent months. There is also a lot of nervousness in the market given the global developments,” Ficci said.

The chamber hoped that RBI would finetune the monetary policy taking into account industry concerns.