Support: +91-22-61011756 /
Featured Articles
Featured Articles   -   Project Experts Speak
Monday, 09 Dec 2019
Share this on :

RBI springs a shocker keeps the repo rate unchanged at 5.15 percent: Niranjan Hiranandani

Niranjan Hiranandani

In a challenging scenario – and no better term to describe the Indian economy vis-à-vis GDP growth in the past few months. Given this, it would be expected that policy reforms and changes would all be focused on enhancing GDP growth.
The Indian Government has been coming up with measures to boost GDP figures, and a lowering of the repo rate was expected over concerns that growth momentum is slowing down; as also it being necessary to boost liquidity in the economy.
So, it was disappointing to see the Reserve Bank of India (RBI) Governor change his perspective, and has been positive about reduced interest rates impacting the demand side of the economy in his previous monetary policy reviews, this time he has opted to ‘maintain the accommodative stance while keeping repo rates unchanged’.
This is disappointing; India Inc was expecting a rate cut of one instead of small tinkering such as a rate cut of 0.25 bps, which would have provided a boost to the Government’s recent initiatives to kick-start GDP growth.
Instead, we have a situation where the RBI Governor said that ‘the upcoming Budget would set stance for further economic policies’. Banks have not yet passed on the complete advantage of previous rate cuts to customers; this time we were hopeful that things would be different and we would see moves aimed at boosting the demand side.
The resulting situation brings back memories of what had been done in 2008, when following the Lehman Brothers crisis, a one-time roll-over had been allowed - in the present scenario, it becomes even more necessary.
Given that the RBI has also lowered its GDP growth forecast to 5 percent, it leaves one wondering why the logical step of a rate cut has eluded the Indian economy. Globally, one finds most banks are interest negative, and one wonders why we are not in sync with the global banking scenario.
In response to the fall in GDP growth rate, the Indian Government has come up with a slew of new fiscal policy measures, including a large reduction in the base corporate tax rate to boost private sector investment; last-mile funding for stalled and delayed real estate projects should be functional in the next couple of months. Given these aspects, one would have expected the RBI to reduce interest rates as part of the moves to support growth revival. Hopefully, in the near future, we should see remedial measures in the form of rate cuts.

Post Your Comments

Projects Explorer App

Data Explorer - Facade Search - ProjectsToday


Free access to Project News and Analysis

Project and Tender Alert in your mailbox

Explore the largest Database on Projects for free

Be part of Online Projects Community

User login
Start Exploring

Subscribe to any of our premium plans to

Access to complete information on 43000+ projects

Use our Notification service for instant update on projects and tenders

Closely monitor your opportunities with "WORKSPACE"

Use our online platform for promotions of your products and services