Any further hike in interest rate will kill industry: CII

Industry body CII today cautioned against any further hike in interest rates, saying it would further hamper the growth prospects of the country and "kill" the industry.

"Any further increase (in interest rates) will kill the industry.. the supply and demand side should be addressed...", CII President B Muthuraman told reporters here.

Stating that the solution was not only in changing the monetary policy by the Reserve Bank, he said issues like demand and supply side needed to be addressed first.

Leading industrialist and Bajaj Auto Chairman Rahul Bajaj, who was also in city, echoed similar views saying any further hike in interest rates would affect the fixed income and poorer sections of the society besides the industry.

"In the last 15 months, RBI has increased the basis points by 10 times totalling to 275 basis points. But what happend to inflation"", Bajaj asked referring to the apex bank's action to contain the price spiral.

He said RBI's move would only affect the demand which would further lead to decrease in flow of investments into the country.

"If India has to grow like other countries, then demand has to increase and because of that investment will also increase," he said.

The tightening of interest rates was the whole problem of growth and inflation. "The industry was the worst hit and ultimately crazy inflation will affect the industry's growth..by increasing the interest rates, we are increasing the cost to the customer which is artificially containing demand," he said.

On June 16, the Reserve Bank raised the key short-term lending and borrowing rates by 25 basis points for the 10th time since March, 2010.
In May, the country's inflation stood at 9.06% while food inflation as measured by the Wholesale Price Index was at 7.78%.