With 12 rate hikes by the central bank in eight months, the question is if Reserve Bank’s tightening is really serving a purpose? Despite a stubborn inflation, corporate India has had doubts if RBI’s rate hike cycle is the right tool to tame it down, considering the risk it doles out to growth. Slamming RBI’s 25 bps rate hike on Friday, Adi Godrej, chairman of the Godrej Group said that the interest rate hikes have not helped contain inflation. As India Inc now sees a blurring growth story, Godrej holds, “RBI’s rate hikes have damaged the economic growth.” On CNBC-TV18's Forbes India Show, he said the inflationary pressure at present is due to global commodity prices and not because of excess money supply in the Indian economy. "And, therefore, to raise interest rates to fight this inflation did not make sense," he added. Continuing with his sharp reaction, Godrej said 'monetarist' RBI takes rate hikes as the only big solution. He also held that the rate hike cycle should have reached the peak a couple of months ago. Criticizing the central bank’s actions, Godrej further said RBI made a blunder allowing the rupee to depreciate to one of the weakest currencies in the world. "When you allow rupee to fall, commodity inflation globally has an even greater effect on your inflation," he said, adding that RBI should have ensured that rupee stayed very firm to other currencies to arrest inflation.
Moneycontrol
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