Tuesday, April 17, 2007

Hiked Interest Rates May Pull Back Indian Growth This Year: IMF

"Indian growth story may go low this year because of the hike in interest rates proposed by the Reserve Bank of India. According to the International Monetary Fund (IMF), India had touched 8.7-growth rate last year, but the growth rate would possibly go down to 8.1 percent in 2007.

However, the IMF has also accepted said that Indian growth would remain rapid as the manufacturing and services sectors are showing strong momentum. But, there is a urgent need to restrict the strong inflationary pressures to retain the good growth rate in the country.

The current policy of higher interest rates will have its impact on consumer demand and the housing market this year and in next year too. It would possibly result in 7.5 percent growth rate in 2008."

Eventhough the rise in interest rates and the media stories about them have dampened the upbeat spirit of Indian Consumers, Industrial Growth is continuing. People who are bullish about the long terms prospects of India and the India Rising story might stand to benefit this current phase of bearish mood of the consumers.

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