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Tighter liquidity and high interest cost are affecting consumer-facing industries. The RBI should ensure that there is sufficient liquidity in the system so that it does not affect the festival season, says a survey from the Confederation of Indian Industry (CII).
The survey was based on response from office-bearers of CII’s Association Council (ASCON) across 260 industry associations. It states that with capacity utilisation going up to more than 80 per cent, this is the right time for higher investments. However, this is constrained due to liquidity considerations and higher cost of credit.
The lack of adequate liquidity and poor consumer sentiments have also led to the bottom 10-15 per cent of consumers dropping out of the market. All these have had an impact on sales. For instance, the auto sector is witnessing poor sales, along with rising fuel prices, while MSMEs are operating on thinner margins due to the lack of capital.
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