NEW DELHI: With Reserve Bank of India (RBI) all set to unveil its annual monetary policy, in the shadow of alarming inflation, on Monday, corporate India's top brass, especially those from the real estate, automobile, housing finance, banking and financial services, are a worried lot.

According to an Assocham survey of 150 CEOs and CMDs, the indications are that RBI would take further measures to tighten the monetary flow, as the credit growth continues to remain above the 20 per cent level desired by the bank. The company heads in real estate, housing finance and automobile sectors are very anxious.

Almost 85 per cent of the respondents are confident that RBI would tighten the credit flow in real estate, as this sector had witnessed a maximum increase in price. The other sectors that may be affected by the interest rate hike include construction, automobiles and banks.

Feel the pinch

The car manufacturers and dealers have already started feeling the pinch following the decline in sales. The cost of deposits flow is rising and the pressure on margins is building up. The majority of the corporate heads, bankers and economists across different sectors are not sure whether the interest rates had peaked and RBI would not be tempted to further tighten the money supply in the system, according to the survey.

However, 40 per cent of the respondents felt that interest rates are somewhat near the peak. Around 74 per cent of the CEOs are of the opinion that a tight monetary policy would affect the medium and small enterprises more than the large business houses.

Inflation tolerable

A majority of those covered in the survey are quite emphatic that when the economy is growing at 9 per cent, the inflation rate of 5-5.5 per cent was tolerable as resilience builds up. Although due to seasonal factors inflation continues to rule above 6 per cent mark for the last few weeks, the average price rise for 2006-07 remains within the limit projected by RBI.

According to Assocham president Venugopal Dhoot, the hike in interest rates has not only hurt exports but was also giving the cost-push to manufacturing, which in turn led to inflation.

``This is how we face the threat of being pushed into a vicious circle. The challenge is to break this circle,'' he said.

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