High rates will slow India industry: ICICI Bank

High rates will slow India industry: ICICI Bank

Kolkata: India’s industrial growth could follow consumer spending and slow if interest rates are not lowered, ICICI Bank Managing Director K.V. Kamath said on Monday.

“High interest rates have reduced affordability, thereby hampering the consumption-led growth in the last two years," said Kamath, who heads India’s largest private bank.

Industrial output grew a weaker-than-expected 7.1% in July from a year earlier, the slowest annual pace since October, data showed last week.

“Interest rates are not changing even though there is enough liquidity in the system. There will be a challenge on (industrial) growth if interest rates are not lowered," Kamath said.

Between June 2006 and March, the central bank raised its main short-term lending rate by 125 basis points to 7.75% to contain inflation pressures in Asia’s third-largest economy.

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