Reserve Bank of India (RBI) governor Raghuram Rajan went against the majority vote and kept policy rates unchanged in the monetary policy on April 3, minutes of the technical advisory committee meeting showed. Rajan sided with the minority three votes out of the seven external member committee to keep the repo rate unchanged at 7.75% on the view that previous rate cuts still needed to be transmitted into the economy.
Members supporting no cut in policy rates had also pointed out risks from monsoon and advised to wait until August for a rate cut. Four external members had voted for a cut in repo rate and, out of them, two recommended a deep 50-bps cut. These members noted the slowdown in private consumption demand, weak industrial output growth and stressed profitability of companies. “They were of the view that a decrease in interest rates would stimulate the interest-sensitive sectors of the economy and enable depreciation of the exchange rate, thereby helping the globally connected sectors,” the minutes said.