The Reserve Bank of India's decision to increase the repo rate by 25 basis points will hit hard the common man and retard industrial growth and investment in the country, Tamil Nadu Chamber of Commerce and Industry has said.
Mr N. Jegatheesan, President of the Chamber, in a statement here said that the hike will pull back the momentum of industrial growth in the country and accentuate the woes of common man as all types of loans will become costlier. The hike, coming close on the heels of a rise in petrol prices would be hard to bear with. Since March 2010, the rate has been hiked 12 times on regular intervals and the reason advocated was to contain inflation. Such manoeuvres has resulted in an increase in lending rates by banks and reduced money circulation, much to the chagrin and discomfiture of trade, industry and the general public. It has neither caused significant impact on inflationary trend.
In order to effectively and permanently control inflation and leverage growth, it is imperative for the government to address the several constraints faced by many industrial segments , he said.