MADURAI: With the Reserve Bank of India (RBI) raising the repo rate by 0.50% for the fourth time in the 2022-23 financial year on Friday, the Tamil Nadu Chamber of Commerce has stated that this will gravely affect the trade sector, industries, especially MSMEs, industrial investments and finally the general public.
In a release, chamber president Dr Jegatheesan said the RBI on Friday increased the repo rate from 5.40% to 5.90%. "It is surprising that the repo rate is being raised again and again, in the absence of any change in the GDP ratio despite a sharp fall in the price of crude oil in the international market. This rate surge has resulted in higher interest rates on home loans, auto loans, personal loans and gold jewellery loans. The general public is already reeling under the inflation in food products' prices. The trade industry, especially the MSMEs, now have to face an acute financial crisis on top of the existing issues of fuel price hike, shortage of labourers and inflation," he said.
Though the RBI claims that the repo rate is being raised to control inflation, until now the interest rate on bank loans has only increased. "The cash flow has decreased drastically, and the traders and public are bearing the brunt. There is no evidence to show that the move has mitigated inflation. The repo rate increase will also adversely affect the country's economic development. The real estate and automobile sectors will witness reduced sales and as a result, the cost of production will further increase," Jegatheesan said.
The chamber has urged the Union government to take proactive steps to tackle inflation by increasing investments in the trade and industrial sector, increasing productivity, creating more employment opportunities for youth, and adopting new strategies in the agriculture sector among other measures.