More tightening of rates to hamper growth: CII

An appreciating rupee and high interest rates are expected to reduce investment flow in the country hampering the pace of economic growth, industry chamber CII said today.

The chamber said the Reserve Bank of India (RBI) should consider easing the monetary tightening measures introduced earlier in the wake of moderating inflation as these norms are drastically impacting profit margins of exporters and investment rates in the country. The Reserve Bank is set to review its monetary policy on July 31.

CII pointed out that tightening of monetary policies has also lead to a decline of 2% in non-food credit offtake between April-May. Non-food credit dropped to Rs 18,41,656 crore from Rs 18,82,392 crore during the April-May period last year, CII said in a statement. "Total bank credit also declined. This trend is a cause of concern for expansion and growth," CII said.

The chamber added that the central bank must ease interest rates so that the industry is encouraged to carry on with their expansion plans.