Reductions in key interest rate by the RBI have not helped stimulate investment in the manufacturing sector, said a poll ahead of the Reserve Bank’s policy review on Tuesday. According to the survey conducted by Ficci, 69 per cent respondents do not foresee any substantial increase in investments by their organisation as a result of reduction in repo rates.
RBI has lowered interest rates by a total of 0.50 per centsince January, but banks are yet to pass on the benefits to borrowers. “Interest rates or cost of finance continues to be sticky.Interest rates paid by the manufacturers range from 9.5 per cent to 14.75 per cent as per the survey with average interest rate at 12.2 per cent. About 58 per cent respondents said availing credit at over average interest rate of 12 per cent,” the survey said.
Banks have said they will wait till RBI’s next monetary policy review on April 7 before deciding on interest rates. The survey also forecast negative growth rising to 18 per cent in the January-March quarter from 11 per cent in the previous one. Also, over 80 per cent respondents are not likely to hire additional workforce is the next three months.