(RTTNews) - Wednesday, Reserve Bank of India’s tight monetary policy might force energy sector to postpone their expansion plans according to a study conducted by Assocham, reported the media. The sector witnessed a drop in credit disbursements to Rs.5, 852 crores in fiscal year 2008 from Rs.10, 736 crores in the previous fiscal.

The report said that the power sector that missed electricity generation targets in tenth five-year plan is also impacted by the rising cost of funds as well. Assocham also anticipates that power shortage might hit the economic growth by over 1% on annual basis.

The central bank’s monetary measures impacted the key sectors like mining, construction, petroleum, gems & jewellery, textiles in credit disbursements. Credit allocation to the mining and quarrying sector including coal also fell to Rs.2, 912 crores from Rs.3, 558 crores, said the report.

Assocham President, Sajjan Jindal reportedly said that the with the hikes in the policy rates, the banks are left with no option but to hike the lending rates, which led to slower bank credit and slower growth. Assocham citing a latest release by RBI stated that the growth in bank credit has declined to 21.6% in fiscal year 2008 from 27.9% in the prior year.

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