WALR in real terms declined sharply from 6.9 per cent in the high growth phase of 2003–08 to 5.0 per cent in the crises period of 2008–10. It fell further to 2.7 per cent during 2010–12 period and then went up to 4.8 per cent in the subsequent period.
Despite stickiness in the nominal interest rate, the reduction in the real rate was higher as inflation on an average turned out to be higher. However, in 2012–13 as inflation showed a significant moderation the real lending rate has risen. Why did the investment growth slacken despite moderation in real lending rates?