Interest rates have started moving up, following the recent volley of repo rate hikes by the RBI. At least four major banks have already increased their lending rates and more are likely to follow soon. The hike will mean higher EMIs for new loans and extended tenures for existing floating rate loans. At the same time, banks have raised their deposit rates, bringing cheer to investors. Here is how the rate hike will impact borrowers and investors.

The interest rate will go up, which will extend the tenure of the loan. The impact will be bigger on longer loans. In case of a 20-year loan, at 7%, every 0.25% hike in rate will increase the tenure by roughly 10 months. The repo rate has been hiked by 0.9% in two tranches. If your home loan has 19 more years to go and the rate is increased by 0.75%, be ready to pay 30 more EMIs.

The impact will not be so dramatic in shorter tenure loans. So if your home loan is nearing completion, you need not get too worried by the rate hike.

The country’s industrial output growth rose to an eight-month high in April, helped by a low base, pointing to a gradual and continuing recovery but the data still showed some areas of weakness in the sector, which is crucial for faster economic expansion.

Data released by the National Statistical Office (NSO) on Friday showed the index of industrial production (IIP) rose an annual 7.1% in April, compared with an upwardly revised 2.2% in March. The sector had grown by 133.5% in April 2021 on the back of a very low base of 2020 when the Covid-19 induced lockdown had smothered economic activity and growth.

Several indicators had pointed to the recovery gathering momentum, including PMI manufacturing surveys and GST receipts. The impact of the war in Ukraine and the breakdown in supply chains have triggered stubborn price pressures which will have an impact on growth and the manufacturing sector going forward. But economists were surprised by the resilience of the sector although they pointed to the weak spots that still need to be watched in the manufacturing sector.

Even before the bids are called, 5G auctions are fast turning out to be a turf battle between the well-heeled telecom operators such as Reliance Jio, Airtel and Vodafone Idea and the new-age Big Tech such as Google, Amazon, TCS and Cisco as the two sides fight over the issue of deploying high-speed private networks for enterprises.

The telecom companies, who traditionally buy spectrum in auctions and thereafter roll out the networks, are protesting the decision of regulator Trai to consider giving space to the new-age companies in the deployment of captive business networks such as those that will be used by smart factories, hospitals, educational institutes, agricultural players, ports, airports, and hotels.

While a final decision on the matter will be taken up by the Union Cabinet that will consider Trai’s recommendations which have been forwarded by the inter-ministerial Digital Communications Commission, the telcos are saying that a direct entry of non-telcos into the business would be a deal-breaker, and thus they may not go ahead with 5G bids and the resultant network investments.

" With the assumption of a normal monsoon, in 2022 and average crude oil price in the Indian basket of 105 dollars per barrel, inflation is now projected at 6.7 percent in 2022-23.”

The six-member Monetary Policy Committee headed by the Reserve Bank of India (RBI) Governor Shaktikanta Das on June 8 unanimously raised the repo rate, the key policy rate at which the central bank lends short-term funds to banks, by 50 bps to 4.90%.

The latest hike comes after the Reserve Bank announced a 40 bps increase in repo rate in an off-cycle policy move in May.

Mitsubishi Electric Corporation announced today that it will invest approximately Rs 220 crore in its subsidiary Mitsubishi Electric India to launch a new factory in India. Expected to start operations in December 2023, the new factory will manufacture inverters and other factory automation (FA) control system products to meet the growing demand in India.

The Indian market is expanding at an annual rate of about 8 per cent, primarily in the areas of automobiles, food & beverage, pharmaceuticals, data centres, and textiles, with further market expansion expected in the future.