New Delhi,
The industry on Wednesday said 25 basis points rate hike by the RBI will hurt India’s growth prospects and exhorted the central bank to revert to the policy of benign interest rates.

However, a section from India Inc said the decision of the RBI was a clear hint to the industry to push for growth by taking investment decisions, while some believe the central bank’s hawkish monetary policy stance is here to stay for a while.

The RBI for the first time in four-and-half-years raised key interest rate on Wednesday by 25 basis points to 6.25% on inflation concerns arising from surge in international oil prices.

“Given that inflation is being led by supply side issues, CII believes that raising interest rate would hurt growth while proving unequal to the task of tackling inflation,” CII Director General Chandrajit Banerjee said.

He hoped that going forward, the RBI would reassess and revert to the policy of benign interest rates which would be growth supportive.

“Going forward, the hardening of interest rate scenario is here to stay at least in the short term, however, much we may not like it,” Assocham secretary general DS Rawat said.

“The input cost pressures as highlighted by the RBI policy review would only increase for the exporters with the hiking of the repo rate by 25 basis points,” engineering exporters’ body EEPC India Chairman Ravi Sehgal said.

“The rate hike gives a clear hint to India Inc to push for growth, take investment decisions as it can now foresee growth rate to pick up,” said George Alexander Muthoot, MD, Muthoot Finance Limited.

Realtors’ body Naredco’s national president Niranjan Hiranandani said the hike is justified on account of inflationary trends, global hardening of interest rates as also petroleum prices moving upwards.