RBI hikes repo rate by 25 points
Reserve Bank has raised the repo rate i.e. rate at which the RBI lends money to banks by 25 basis points for the 12th time since last March. Already slugging auto market has resented such a move by ace bank authority and slammed it by terming it as ‘totally unexpected’. P Balendran, General Motors India’s Vice-President strongly argued that already the market was facing an acute slowdown. To add its woes, such a move is taken by Reserve Bank which will further dampen the cringing demand and will pour cold water on the festive season. Balendra was expecting a mere 5% growth in sales this festive period unlike 20% hike every year. But such good plans of hiking repo rates will not allow the company to achieve even that much.
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The Reserve Bank raised its key rates by 25 basis points to 8.25% in order to curb down inflation which stood at an elevated 9.78% in August. Another car company Fiat India also condemns RBI for taking such a drastic step during such a period of crisis. Rajeev Kapoor President and Chief Executive of Fiat India resonated the same sentiments as Balendra and said this fresh step will further aggravate the situation. Yesterday itself the petrol prices have been hiked by the oil companies. Such steps are squeezing ‘Aam Aadmi’s’ pocket all the more and not letting him come out of the fear of price rise. Auto companies, on the other hand were on the brink of hopeful days ahead but this hike in repo rate will not let them overcome their grieves. However both GM and Fiat officials have refused to comment on probable hike in car prices by saying that the companies have not thought about it yet.
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