The pre-Budget Economic Survey on Wednesday hinted that the interest rates may go up due to high fiscal deficit and improved credit demand from the commercial sector.
"With fiscal deficit remaining high and signs of pick up in the flow of credit to commercial sector, the possibility of interest rates moving northwards cannot be ruled out," the Survey, tabled in Parliament, said.
Economic Survey 2003-2004: Complete Coverage
It also said the Reserve Bank of India has continued its soft interest rates policy stance, imparting greater flexibility to the interest rate structure.
RBI had progressively reduced the Bank Rate, the interest it charges to the commercial banks, to 6 per cent and the Repo Rate, the interest charged by the banks when they lend to RBI, to 4.5 per cent.
More from rediff