How does RBI interest rate impact various sectors?

Q: What happens most often is that people tend to say okay the Reserve Bank of India has gone ahead and increased rates this time to sell down the rates sensitive (banks, real estate sector, autos). Is it just these sectors that are impacted by any Reserve Bank interest rate hike or would you say there are other sectors as well that have begun to become vulnerable to what the Reserve Bank of India is doing in its rate direction or rate cycle?

A: There is an impact on all sectors. The intensity of the impact is different. The most effected sectors are the ones that is the banking, capital goods, construction. These are clearly more driven by interest rates setting in the economy and they get affected the most. But the second in line would be the consumer durable sector which is also sensitive both to the interest rate setting as well as to the domestic demand behaviour and the entire car, white good demand they get affected in this scenario. The least likely sector which gets affected is basically the staples. We still have to eat food everyday and therefore the consumer non durable, the non-discretionary part of demand is the least affected in this scenario. But the issue here is that if the slow down in the interest rate sensitive sectors whether it is banking, capital goods or consumer durables and construction, if this continues for a very prolong period of time then there could be after some period even an impact on the non discretionary side of consumption as well though the impact is going to be lagged on that particular sector.