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The cost pressure on industry would not come so much from the hike in interest rates, but from commodity prices, because most of the commodity and raw material prices have gone up sharply.
India, except for some basic commodities like bauxite, is largely deficient. We are importing coal, crude oil. So those cost pressures are not going to go away. The incremental impact on cost for industry could not come so much from this. But the stance of the RBI is that there is need to curb demand. They are trying to do what they can. They cannot change the administered price of petroleum. That has to be done by the Ministry.
The RBI cannot have any say on commodity prices. So, RBI's job is rather difficult. They have only limited operating environment. But the inflation pressures building up are large – from different areas and of a significant nature.
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