ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • India
    • Economy
    • Politics
    • Markets
  • World
    • Economy
    • Politics
    • Markets
  • Companies
    • Auto
    • Banking & Financial Services
    • Pharma
    • Energy
    • Infrastructure
    • Media
    • IT
    • Telecom
    • Consumer Products
    • Aviation
    • FMCG
  • Personal Finance
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
  • Mutual Funds
  • Technology
  • Automobile
    • Cars
    • Bikes
  • Small Business
    • SME
    • Startups
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
    • AUTHORS
Home » India News

RBI interest rate hike would impact growth; rate sensitive sectors not doing well

Last week the 10-year benchmark bond yield hit over two-year high as the minutes of the monetary policy committee (MPC) revealed the preference of a member “to vote for a beginning of the withdrawal of accommodation in the next MPC meeting in June.

  • Twitter
  • Facebook
  • GPlus
RBI interest rate hike would impact growth; rate sensitive sectors not doing well
The banking sector’s NPAs are still peaking-gross NPAs expected to shoot up to up to 11% in the March quarter from 9.4% a year ago. Image source: Reuters
By ZeeBiz WebTeam
Updated: Tue, Apr 24, 2018
10:04 am
ZeeBiz WebDesk
RELATED NEWS
After RBI, UPI-operator NCPI warns about 'AnyDesk' app fraud: How your money is robbed and how to save it After RBI, UPI-operator NCPI warns about 'AnyDesk' app fraud: How your money is robbed and how to save it
Inflation at 19-month low, RBI set to give big relief in EMIs: Know what will happen to your home loan Inflation at 19-month low, RBI set to give big relief in EMIs: Know what will happen to your home loan
RBI slaps penalties on HDFC, Kotak Mahindra Bank, Allahabad Bank and Bank of Maharashtra RBI slaps penalties on HDFC, Kotak Mahindra Bank, Allahabad Bank and Bank of Maharashtra
Micro finance, gold loan and consumer finance space to get boost by this step Micro finance, gold loan and consumer finance space to get boost by this step
RBI rate cut: Big relief to realty sector - How it will help homebuyers RBI rate cut: Big relief to realty sector - How it will help homebuyers

Last week the 10-year benchmark bond yield hit over two-year high as the minutes of the monetary policy committee (MPC) revealed the preference of a member “to vote for a beginning of the withdrawal of accommodation in the next MPC meeting in June.” This is perhaps the strongest guidance given by an MPC member ever. However, the Reserve Bank of India (RBI) should defer the rate hike at least for two more quarters.

First of all, the rate sensitive sectors are not doing well for example, housing prices fell by an average 7% during January-March in nine major cities over the previous quarter and there is no major drop in the inventories of real estate sector. The unsold housing stock fell by 2% but still remain at an elevated level at 595,074 units during March 2018 quarter.

India’s merchandise exports also fell 0.7% yoy to $29.11 billion in March 2018. India’s garment exports contracted for six months in a row in February 2018. Apparel exports dropped almost 4% in FY2018. Consequent to banking frauds, now export of jewelries also impacted very badly. Exports in FY2019 also may be impacted due to rising protectionism across the world and tightening of export credit by the Indian banking sector. The role of credit in these sectors is quite crucial.

Watch this Zee Business video here:

Though the public investment has picked up, the private investments haven’t improved significantly. Although the IIP (Index of Industrial Production) has picked up in the recent months, the cumulative growth for the period April-February FY2018 still remains lower at 4.3% yoy as compared to 4.7% during the corresponding period of previous year. The banking credit growth has picked up in double digits, however, the consumer loans dominate the incremental credit flows. Can consumer segment keep doing well when hard sector like industrial sector fail to grow faster?

The banking sector’s NPAs are still peaking-gross NPAs expected to shoot up to up to 11% in the March quarter from 9.4% a year ago. Many debt restructuring issues, especially the ones, referred to NCLT, are yet to be resolved. At this juncture, the rate hike could derail the resolution process in some cases.

Any hurry to hike the interest rates, otherwise, would be a major setback to India’s economic growth at this juncture.

By G Chokkalingam
(The writer is the 
founder and managing director, Equinomics Research and Advisory)

Source: DNA Money

TAGS:
RBI
RELATED NEWS
After RBI, UPI-operator NCPI warns about 'AnyDesk' app fraud: How your money is robbed and how to save it After RBI, UPI-operator NCPI warns about 'AnyDesk' app fraud: How your money is robbed and how to save it
Inflation at 19-month low, RBI set to give big relief in EMIs: Know what will happen to your home loan Inflation at 19-month low, RBI set to give big relief in EMIs: Know what will happen to your home loan
RBI slaps penalties on HDFC, Kotak Mahindra Bank, Allahabad Bank and Bank of Maharashtra RBI slaps penalties on HDFC, Kotak Mahindra Bank, Allahabad Bank and Bank of Maharashtra
Micro finance, gold loan and consumer finance space to get boost by this step Micro finance, gold loan and consumer finance space to get boost by this step
RBI rate cut: Big relief to realty sector - How it will help homebuyers RBI rate cut: Big relief to realty sector - How it will help homebuyers

LATEST NEWS

Apple teams with Ant Financial, banks for interest-free iPhone financing in China

Google ends forced arbitration for employees globally

Taxpayers Alert! Check out these 8 new features at GST Portal: Here's how easy GSTR filing gets for you

Market is silent to positive cues; Don’t force it to speak: Shankar Sharma, First Global

Another RBI rate cut on cards? Why home, personal, auto loan takers should expect more cheers

Asset management giant IDFC launches equity hedge tactical fund 'IDFC India'

Eastern Naval Command Recruitment 2019: Apply for 116 positions; check details

How withdrawal of MFN status may hit agriculture trade with Pakistan

No job loss! Alibaba CEO rules out layoffs this year despite China`s economic slowdown

PACL Refund: Beware! You may not get any money if you do this

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • Amazon Prime Day
  • Income Tax
  • Bharti Airtel
  • NPA
  • Home Loan

Trending Topics

  • Farm Loans
  • 7th Pay Commission
  • Sanitary Pads
  • National Stock Exchange
  • GST

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved