Industry on Thursday expressed concern over the Reserve Bank of India's strict monetary policy saying while it was unlikely to tame inflation it had affected industrial production.

Associated Chambers of Commerce and Industry of India (Assocham) President Dilip Modi described the hike in the repo rate as a fire fighting exercise with limited options and said that it would further slowdown the manufacturing sector. The performance of the capital goods sector was a matter of concern as it had shown lower growth for the second successive month, he said.

Pointing to the high inflation rate, low profit margins and curbs in capacity expansion, Mr. Modi said it would have been better if the RBI had waited for the new agriculture crop to arrive before reviewing its monetary policy.

Federation of Indian Chambers of Commerce and Industry Director General Rajiv Kumar feared that the measure would affect the growth process given the nervousness due to global developments and the rising cost of finance and raw materials. Mr. Kumar hoped that the government would take industry's concern into consideration and fine tune its monetary policy and address supply-side constraints and improve the investment environment.

Confederation of Indian Industry Director General Chandrajit Banerjee too expressed his anxiety over the prospects of industrial grown in the coming financial year particularly in the face of rising lending rates and the high inflation rate due to prices of global commodities such as fuel, minerals and fibre.

He said the persistent shortage of liquidity had pushed up deposit and lending rates which would hit fund investment activity in the coming year.

PHD Chamber President Salil Bhandari feared that this would impact consumer demand as supply-side bottlenecks continue to affect the economy as well.