INDIA INC FACES DOUBLE WHAMMY FROM RUPEE DIP

New Delhi, Aug. 24: Corporate India is facing increasing borrowing costs given the rise in bank lending rates, potentially dampening industrial production and revival in domestic demand going forward, says a report.

According to a Dun & Bradstreet ( D& B) report, high borrowing costs and weakness in rupee is expected to impact corporates, while uncertainties in the global market has the potential to derail the global growth story.

According to Arun Singh, lead economist, Dun & Bradstreet India, while the borrowing costs for firms are rising given the increase in bank lending rates, a weak rupee has also added to the borrowing woes of corporates sourcing funds from the global markets.

“The rise in lending rates in general and borrowing cost in specific can dampen the industrial production and the revival in the domestic demand,” Mr Singh said.

Meanwhile, hedging costs have increased and dollar loans have become costlier. “On top of that, we have heightened uncertainties in the global market which has the potential to derail the global growth story,” he added.

On the prices front, D& B expects the CPI inflation to be in the range of 3.7- 3.9 per cent and WPI inflation to be in the range of 4.8- 5 per cent during August this year.

D& B expects Index of Industrial Production ( IIP) to have grown by 6.8- 7.2 per cent during July 2018.