New Delhi: The RBI needs to go in for a larger rate cut, more than 25 basis points, in the next monetary policy review in June to reverse the current slowdown in the economy, said a research report by country’s largest bank SBI. The Reserve Bank of India (RBI) had cut the key short term lending rate (repo) by 25 points each in its last two policy reviews and is slated to announce the next bi-monthly policy on June 6.
“Are we currently facing a quasi growth slowdown? The apparent nervousness is clearly reflected in the trends exhibited in key stock indices,” said the SBI’s research report ‘Ecowrap’. Initial trends in fourth quarter of 2018-19 exhibit overall decline in sectors such as telecom equipment and infra services; agro chemicals; petrochemicals; infrastructure developers and castings, it noted.
Also, pharmaceutical companies dependent on exports are likely to report poor growth numbers. In January-March 2018-19 quarter, of 384 companies more than 330 companies exhibited negative growth in mid-line and bottomline. Perhaps, significantly depressed rural prices is disturbing rural income and weak demand is affecting the FMCG sector, the report said.