Industry chambers today expressed disappointment over the decision by Reserve Bank of India (RBI) to keep interest rates unchanged. According to various industry associations, this would result in huge capital inflows leading to further appreciation in the rupee.RBI, in the third quarter review of the monetary policy for 2007-08, kept the bank rate, the reverse repo rate, the repo rate and the cash reserve ratio unchanged.In the wake of the US Federal Reserve cutting interest rates by 75 basis points, the industry was expecting a cut in the bank rate and repo rate to soften the high interest rate structure in the country.Ganesh Kumar Gupta, president, Federation of Indian Export Organisation (FIEO), said: "The significant interest rate differential would manifest itself in a surge in capital inflows resulting in the rupee appreciating further and thereby impinging on the competitiveness of exports."Venugopal N Dhoot, president, Associated Chamber of Commerce and Industry (Assocham), said: "It seems inflation has become the sole concern of the central bank. We fear the continued policy indifference towards issues of real economy may compel the industry to postpone their investment plans."L K Malhotra, president, PHD Chamber of Commerce and Industry (PHDCCI), said: "A bank rate cut would have reinforced the growth momentum in the industrial sector. Also, it would have contributed to stablisation of investment flows, and, in turn, contained the inflationary tendencies due to the recent cuts by the US Federal Reserve by 75 basis points."According to Assocham, the decision to restrain from cuts in interest rates would make it difficult for various industry segments to cope with slackening demand, rising imports and high borrowing costs.
