Though India Inc welcomed RBI’s 0.25 per cent rate cut , they said the time was opportune for the apex bank to go for a bolder 50 basis points cut to augment growth.
“Given the kind of stress in large sectors of the economy, particularly in manufacturing, construction and infrastructure, the policy interest rate cut should have been bolder,” Assocham President Sunil Kanoria said.
Given weak private investment in the face of low capacity utilisation, a reduction in the policy rate by 0.25 per cent will help strengthen growth, RBI Governor Raghuram Rajan said in the first bi-monthly monetary policy review for the 2016-17 fiscal, which began on April 1.
“We now look forward to banks taking the lead in supporting the investment cycle and improving economic growth,” Ficci President Harshvardhan Neotia said.
Rajan also took a host of measures on the liquidity front, starting with the narrowing of policy rate corridor to 0.50 per cent from the earlier 1 percentage point, which resulted in the reverse repo rate - at which banks can park excess funds with the RBI - being reset at 6 per cent.
Reacting on RBI’s policy Omaxe ltd CEO Mohit Goel said: “It is expected that the both the measures will reduce the cost of funds for banks; the benefits of the same should be passed on to consumers by the banks, thereby benefiting the entire economy.And with RBI indicating that the policy may continue to be accommodating going forward, albeit with condition, we believe some more reduction in interest rates will happen, thus providing the required impetus for economy to grow at a faster trajectory.”
Meanwhile realty experts are of the view that interest on home loans is expected to come down helping the revival of housing sales following RBI’s lowering the policy rate by 0.25 per cent on Tuesday day, say realty experts.