RBI's rate cuts to propel growth, spike demand: India Inc

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India Inc today hailed Reserve Bank's move to reduce repo rate and CRR by a quarter per cent. (Reuters) India Inc today hailed Reserve Bank's move to reduce repo rate and CRR by a quarter per cent. (Reuters)
SummaryIndia Inc today hailed Reserve Bank's move to reduce repo rate and CRR by a quarter per cent.

rating agency ICRA's Managing Director and CEO Naresh Takkar said the RBI stances are supportive of economic growth and would benefit interest-rate sensitive sectors such as automobiles, housing and the MSME segment.

Crisil said the reduction in rates would enable banks to lower lending rates and improve transmission of monetary policy.

"As inflationary expectations adjust downward, banks will have greater flexibility in reducing deposit rates, thereby lowering their cost of funds. This will create further space for a reduction in lending rates in coming months," said Crisil Chief Economist Dharmakirti Joshi.

Federation of Indian Export Organisation (FIEO) Chief M Rafeeque Ahmed said the combined impact of repo rate and CRR cuts might see some upsurge in bank credit to industry which had decelerated.

Arun Singh, economist with Dun & Bradstreet, said the RBI's shift in monetary policy stance to arrest loss of growth momentum coupled with the government's reforms measures was expected to further boost the sentiment of the business community and support investment activity in the economy.

Fitch Group firm India Ratings and Research said the RBI move would have positive impact of rate sensitive sectors such as housing, consumer goods and automobiles.

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