Rising borrowing costs had a severe impact on India’s industrial production, which grew at the slowest pace since 2002 in March. India IIP Data for March AT 3% Vs 8.6% in Feb. Sonal Verma of Lehman Brothers said,
Industry is facing headwinds from tight monetary conditions, high raw material costs and weakening foreign demand.There is unlikely to be much scope to cut policy rates in 2008 to boost domestic demand.
Analysts expects interest rates not to come down and higher interest rates are discouraging sales of 2 and 4 wheeler automobiles and residential real estate as well.