(a) whether the repeated hike in interest rates resulted in decline in industrial
production;
(b) if so, the details thereof;
(c) whether the Government proposes to revamp the conventional policy of
interest rates; and
(d) if so, the details thereof and if not, the reasons therefor?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI NAMO NARAIN MEENA)
a)&(b): As per the Index of Industrial Production (IIP) released by the CSO,
the industrial growth has moderated to 5.0 percent in 2011-12 (April-September)
as compared to 8.8 percent in corresponding period of the previous year.
The moderation in the industrial production can be partly attributed to
increase in the interest rate.
(c)&(d): The Reserve Bank of India (RBI) has been increasing policy rate as
a part of monetary policy stance since March 2010 to contain inflation and
inflationary expectations. In the forward guidance of the Second Quarter Review
of Monetary Policy 2011-12, RBI has reported that notwithstanding current rates
of inflation persisting till November, the likelihood of a rate action in the
December mid-quarter review is relatively low. Beyond that, if the inflation
trajectory conforms to projections, further rate hikes may not be warranted.