We should blame weak demand rather than higher interest costs for a likely reduction in economic growth this fiscal year
With the Reserve Bank of India (RBI) having increased the repo rate, considerable concern has been expressed over its impact on growth. Spread sheets are already being reworked to check how India’s growth in gross domestic product (GDP) could be affected. Those against tighter credit conditions feel that just when the Indian economy was showing signs of a pick-up, the Monetary Policy Committee’s (MPC) decision to hike rates will affect its path. But that is exactly the purpose of any rate hike.