Rate cut great booster for economy: India Inc

Sanjeev Sharma

Tribune News Service

New Delhi, March 4

Industry has cheered the surprise rate cut by the RBI which is expected to boost growth and send a positive signal to consumers.

Chandrajit Banerjee, Director-General, CII, said “Coming on the back of a growth-oriented Budget, the unexpected cut in headline interest rate by the RBI sends a huge positive signal that the central bank and the government are working in tandem to provide a robust scaffolding to growth”.

The move is expected to boost consumer demand and cut costs for the industry.

Assocham president Rana Kapoor said the pleasant surprise by the RBI will surely boost the morale of the consumers as also cut the interest costs of the industry. While the economic revival is visible, as the RBI itself, has recognised that there are still low measures of growth in production, credit, imports and capacity utilisation, he added.

However, industry is keen now that the banks pass on the rates. FICCI president Jyotsna Suri said, “Given the cut in the policy rate, we now hope to see transmission of this move in the form of lowering of lending rates by the banks for investment and consumer loans”.

The real estate sector is hoping that the rate cuts will breathe some life into the sector. Amit Modi, Director, ABA Corp and vice- president, CREDAI (Western UP), said this is a good and much-awaited development, since easing interest rate will help revive health of businesses like real estate which are highly sensitive to interest rate movements.

The rate cut may make up for the lack of incentives for the sector in the Budget. Shishir Baijal, CMD, Knight Frank India, said since the Budget did not give substantial impetus to the real estate sector other than the REIT clarification, this move definitely reconfirms a lower interest rate regime in 2015 which will help all stakeholders to heave a sigh of relief.

The industry hopes that banks will get a boost to pass on the cuts. Brotin Banerjee, MD and CEO, Tata Housing, said the rate cuts announced in January had not translated into action by the banks, but a cumulative cut now amounting to 0.5% will enhance lending powers of the banks. It will permit banks to cut down interest rates on home loans enabling new consumers to take advantage of the low interest rates in the real estate market.