Apex industry chamber CII today warned that rising interest rates may hurt new investments even though resources to the tune of $700 billion are in the pipeline over the next three years.
"While the existing investments in the pipelines were being adhered to... May be, newer projects which were at concept stage, which were at the backburner may not come to the front burner," CII President K V Kamath told reporters after a meeting of industry leaders with Finance Minister P Chidambaram.
Kamath said investors were concerned whether high inflation would mean that consumer demand would slowdown, whether high interest would mean that consumers could afford to buy or purchase what they wanted to purchase.
The CII President said he did not see any easing of monetary tightening so long as high inflation persists.
"If inflation is an issue...Till we see inflation easing, then it would be unrealistic to expect any easing of monetary policy," Kamath, who is CEO and MD of ICICI Bank, said.
He, however, quoted the Finance Minister as assuring the industry that they "should look at it very positively that an 8-9 per cent growth is here to stay and this is backed by numbers."
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Kamath said Chidambaram reported figures from CMIE, which talks of a monthly accretion to new projects to the tune of Rs 150,000-170,000 crore that would be around $40 billion, which on an annualised basis would be $450-480 billion.
"Now this should augur very well if all these projects come to the front burner," he added.