The central bank's move to hike policy rates has set the
stage for auto, housing and commercial loans to become dearer once again.
Commercial banks are widely expected to pass on the interest rate burden to
customers, which could made consumer and corporate loans dearer.
According to Vinod Nowal,
Chief Executive Officer, JSW Steel “When growth is taking
place, inflation takes place. When people have the capacity to pay, RBI need to
balance it; they should not always use this tool of rate hike. Interest rates
are already high, if they are further going to increase them, then it will
further affect the business environment.”
“This will definitely create a problem for liquidity, somewhere it will
slowdown the infrastructure investment as well as manufacturing growth. It is
going to further impact already sagging capital expenditure by the
industry.”
Industrial output in July was the weakest in nearly two years, while India's
June-quarter economic growth of 7.7 percent was the slowest in six quarters.
The rupee, which plunged to a near two-year low against the U.S. dollar on Wednesday,
is expected to further weaken on the rate rise, hitting India's import bill.
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