Repo rate: Industry must get loans on easy terms, says Anand Sharma

NEW DELHI: Concerned over sharp escalation in interest rates, triggered by the Reserve Bank's hike in key rates, Commerce and Industry Minister Anand Sharma on Tuesday said industry must get credit on easy terms.

Sharma said that if needed, he would take up the issue of rising credit costs with Finance Minister Pranab Mukherjee. He said industrial growth has to be sustained at a higher level because it is related not only to the GDP growth, but also with employment generation.

"We have always been of this view that there should not be any sharp escalation in the rates by the RBI," Sharma told reporters here. "Industry must get credit on easy terms," he added. While raising lending (repo) and borrowing (reverse repor) rates this morning, RBI Governor D Subbarao said that reining in inflation should take precedence, "even if there are some short-term costs by way of lower growth".

When asked about the impact of RBI's policy on industrial growth, Sharma said, it was too early to comment.

Meanwhile, leading industry chambers CII and Ficci too said that the tight monetary policy would impact the investment environment in the country.

In its annual policy review meeting for 2011-12, RBI today raised repo rate by 50 basis points to 7.25 per cent in a bid to tame inflation. It also raised reverse repo rate by as much to 6.25 per cent.

This is RBI's ninth hike in rates since March, 2010.