Interest rate hike to further dampen growth momentum: ASSOCHAM

BANGALORE: Industry body ASSOCHAM said today's RBI move to hike interest rates by 25 basis points would further slow down fresh investments and restrict industrial growth.

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

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

"All these factors in a high interest rate environment will most certainly put 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 compared to a year ago.