New Delhi (PTI): Amid speculation that Reserve Bank might further tighten money supply to tame inflation, the Finance Minister's adviser on Wednesday cautioned against moving to a high interest rate regime, as it can affect industrial growth.

Attributing rise in food inflation to domestic reasons rather than global factors, Finance Minister's adviser Shubhashis Gangopadhyay said there are too many restrictions on the movement of farm products.

"I agree that curbing inflation by raising interest rates could have serious long term implications on the way we want to revitalise the industrial sector," Gangopadhyay said at a panel discussion organised by chamber PHDCCI.

Talking particularly about the sectors such as food processing which have huge impact on the rural economy, he said, "We don't want these sectors to be adversely affected because funds are extremely expensive."

In this context, he said raising interest rates is not probably the best way of trying to curb inflation.

"Anything that affects investment is not a good idea," he said.

Gangopadhyay's remarks assume importance since there are expectations in certain quarters that RBI may further tighten money supply to cool down inflation, that has already been revised to over eight per cent for the week ended March 15.

Financial services major Barclay's study expects RBI to surprise the market by raising mandatory deposits of banks that they are to keep with the RBI (CRR) and the repo rate at which the central bank lends money to banks against their government securities.

On food inflation, Gangopadhyay said, "We have to think little bit more than blaming the world for rising prices."