New Delhi: Notwithstanding a good monsoon that bodes well for rural demand, two other key drivers of the economy — exports and investments — are showing signs of moderation due to successive hikes in interest rates and a rising rupee, industry body Ficci said on 26 August.
“The adverse impact of rising interest rates and appreciating rupee has engulfed many more sectors and many more firms,” Ficci said in its Business Confidence survey.
The chamber said the assessment made by the participating companies about industry and firm-level performance shows that the industry is in the midst of a moderate slowdown.
Pointing out that a rising rupee and interest-rate hikes have affected sentiments at the ground level, the survey said industrial growth was a matter of concern. “Unless we act to reverse this situation we may see a slowdown in growth,” it said.
The rupee has risen more than 10% against the dollar in the past year, while the RBI has raised key interest rates six times in the past two years to cool inflation.
Of the participating companies, 58% said their current industry performance is ‘moderately to substantially’ better vis-a-vis last six months. In the last survey, 68% had reported likewise.
With regard to firm level performance, 64% said current performance was ‘moderately to substantially’, compared to 73% in the last survey.
As a result of the weakening performance both at the industry and at the firm level, the Current Conditions Index computed by the chamber has nosedived from 70.4 in the last survey to 65.0 in the present survey.