RBI’s 4th repo revision will affect industry, says TNCCI

MADURAI: The Reserve Bank of India’s fourth consecutive increase in repo rate by 0.50 per cent in fiscal 2022 will greatly affect the trade and industry, especially MSMEs, industrial investments and general public, said TNCCI.

It was increased from 5.40 per cent to 5.90 per cent at the Monetary Committee Policy (MPC) meeting. The repo rate has been raised repeatedly in the absence of any change in the GDP ratio, despite the sharp fall in the price of crude oil in the international market, N Jegatheesan, president, Tamil Nadu Chamber of Commerce and Industry, Madurai said on Sunday.

The rise in repo rates has resulted in higher interest rates on home loans, auto loans, personal loans and gold jewelry loans, causing higher monthly installments, or increasing the years of installment. Inflation on food products has also created a huge impact. Especially, the prices of cooking oil have increased so much, the household expenses have increased significantly during the festival season, he said.

Though the RBI claims that the repo rate is being raised to control inflation, the interest on loans given by the banks has only increased and the cash flow has decreased drastically.

The increase in interest rate on loans to banks by 0.50 per cent again would certainly have an adverse impact on the economic development of our country. Especially, the real estate and the automobile sector would be hit hard due to reduced sales and exacerbate the problems in the business sector.

Further, he said factors such as political tensions in international markets, impact on global trade supply, devaluation of the Indian rupee at Rs 81.37 against the US dollar and widening of the trade deficit were the major hindrance to the economic growth. Moreover, inflation in our country is continuously increasing.

To control inflation, repo and to achieve economic growth, the Union Government should take proactive steps to increase investments in the trade and industrial sector, increase productivity, create more employment opportunities for the youth and adopt new strategies in the agriculture sector to increase productivity, the president added.