Hiking interest rates not enough to tame inflation: Thermax

India's index of industrial production (IIP) numbers in May rose a slower-than-expected 5.6% from a year earlier, government data showed on Tuesday. April's industrial output growth rate was revised down to 5.8% from 6.3%.

MS Unnikrishnan, managing director of Thermax, in an interview with CNBC-TV18's Gautam Mukherjee and Latha Venkatesh, gave his view on the IIP output numbers and his divulged future plans for the company.

Below is the verbatim transcript of the interview. Also watch the accompanying video.

Q: Will the Reserve Bank of India (RBI) begin to take cognizance of the slowing industrial production and manufacturing and hence, the rate tightening cycle could hear its end or are you concerned given the sticky inflation, the tightening will continue and we will enter a phase of stagnating growth and inflation staying high?

A: Industry has got a view and RBI has got a different view seemingly. RBI still believes that by increasing the interest rates, they will be able to reduce the availability of cash and will control inflation.

They do not recognise that inflation is being faced by every country in the world and is a global phenomenon at this point of time. It is the affluence that has improved in the world which has inferred the money in the hands of people.

The conception has gone up, so the inflation is not a conventional one that economic theory can prove. By applying the same yardstick and increasing interest rates will not control inflation. They have tried for over one year with nine increases in interest rates and have not been able to control it.

Will they accept that it is not sufficient to control inflation and there are non-fiscal legislative measures which have to be adopted by governance of the country to control inflation? It is impossible to comment on whether RBI will be able to take that decision.

However, things aren