RBI does not Cut Rates, Given the Worries about Inflation: Dr Niranjan Hiranandani
Mumbai, Maharashtra, India
The Monetary Policy Committee headed by RBI Governor Urjit Patel, following its two-day deliberations, on 04 October 2017, maintained status quo as regards Repo and Reverse Repo rates. The Repo rate continues to be at 6 per cent, Reverse Repo rate was also unchanged at 5.75 per cent. In August this year, RBI had cut Repo rate by 25 basis points, and industry as also the government were hoping for an ‘encore’ or even a larger rate cut. Inflation is seen to be the reason behind RBI's decision to maintain status quo.
“Two major stakeholders in the Indian economy, the industry and the government. are both hoping that a interest rate cut will happen - and that it will spur growth, which has dipped to 3-year low of 5.7 per cent in the June quarter,” said Dr Niranjan Hiranandani, CMD, Hiranandani Communities and President, NAREDCO (Nation).
“The Indian economy as also the real estate industry are working their way out from the slow-down that resulted from the tsunamis of Demonetization, RERA and GST. The tsunamis have effectively, slowed down the ‘buy’ decision; almost all home seekers have been in a ‘wait and watch’ mode since past few months. In light of this, a rate cut would have brought about much required positivity for sentiment, which in turn, would have a positive impact on home buyers. Had the RBI announced a rate cut, it would not just have boosted positive sentiment, but would also have marked a turnaround from the negativity which had been perceived in the real estate sector – the timing would be perfect, given the obvious positives of the festive season,” said Dr Niranjan Hiranandani.
Over the period of one year, Indian business and industry are expecting a 100 bps rate cut, and in light of this, a cut in the October review would have been apt. From the perspective of the real estate industry, any rate cut by the RBI boosts sentiment and has a positive effect on sales of residential real estate. “Hopefully, we might see a rate cut in the next review, in December,” added Dr Niranjan Hiranandani.
Dr Niranjan Hiranandani is Founder & CMD, Hiranandani Group. His recent initiative is Hiranandani Communities. He is also President, National Real Estate Development Council (NATION), which works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.
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Ritika Shah, Media Manager, Hiranandani Group, rshah@hrealty.com
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