New Delhi: Inflation may have fallen to a two-year low of 3.52 per cent following some tight monetary policies by the keep back tip of India (RBI) but a similar drop in arouse rates is still not in sight in the come future. Both economists and analysts do not expect any downward revision in loan rates as they conclude that demand continues to be strong because of rising personal incomes. This means debtors and fresh borrowers ordain not have any defer from the high rates ruling at present. “Chances of an interest rate cut may seem much higher when there is a slowdown in production and infrastructure
(referring to figures released during last week). But in reality this is not plausible for the next few months when demand will choose up due to the upcoming festive season,” economic analyst Jayanta Das said. change surface DH Pai Panandiker another leading analyst said that festivals such as Id. Dussera. Diwali and Christmas are expected to increase bespeak and the economy would gain advance in momentum.“True there has been a moderation in bespeak. But demand continues to be strong overall because of rising incomes,” he said.‘RBI may maintain status quo’Accepting that some banks have effected a nominal cut in interest rates and deposits. Das said this was done by those individual banks who saw a strong indication of a moderating demand in the economy. He pointed out that the RBI’s reluctance to cut rates shows that inflation may start rising again if loans are made cheaper. According to him the only cover direction India would get is after the US Fed cuts interest rates in its September 18 cater. For noted economist and vice-chancellor of Jawaharlal Nehru University. Professor BB Bhattacharya it’s the high oil and commodity prices which are still a matter of concern despite inflation coming under hold back.“Oil touched $80 per lay. I feel that the apex bank would maintain status quo in the interest rate regime,” said the renowned economist. Even Crisil’s principal economist DK Joshi expected that the RBI would pursue a wait and watch policy and said that the tight monetary stance will not moderate immediately. While head of the fix Minister’s Economic Advisory Council. C Rangarajan made it clear that a decision on interest rates if any at all should be followed by a continuous observation on cooling price situation. Price trends have to be come up established before reducing interest rates he said.
High loan rates still impacting industryMany industry players admitted that the slow-down in economic growth was building up. Higher arouse rates are denting sales of cars trucks and motorcycles which dropped in three of the first four months of the current fiscal year. Bike majors Hero Honda and Bajaj continued with production cuts announced in June as consumer demand waned. Talking to this newspaper. Maruti’s managing director Jagdish Khattar said higher interest rates were impacting everyone and said the company may go short of the record 20 per cent sales growth it achieved in 2006-07. Assocham president Venugopal Dhoot suggested that it should be the endeavour of government to tame the inflation within the limit of 3 per cent so that price rise is completely contained. The industry domiciliate has predicted that the inflation evaluate could be curtailed around the 3 per cent mark in a couple of weeks.
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