Mumbai, July 18: Indian government`s large debt burden will pressure domestic real interest rates in the medium term, Kenneth Rogoff, economic advisor to the IMF, said on Friday. "Large government debt in the medium term will see real interest rates rise and growth rates slow," he told a banking seminar.
"India had benefited from benign global interest rates and when the rest of the world reverses we could see pressure on rates and capital flows to India as well," he said.
India`s key bank rate was last cut in April 2003 to a three-decade low of six per cent.

But real interest rates -- nominal rates minus inflation -- for companies are upwards of three percent, which economists say affect investments.
The IMF also suggested to China and India that they adopt a more flexible exchange rate policy, its economic advisor said. Bureau Report