The ASSOCHAM expects the Reserve Bank of India to cut the benchmark policy Repo rate by 50 basis points or more, in the wake of a realistic assessment of the state of economy which needs an immediate demand push and investment support by way of reduced cost of borrowing. The ASSOCHAM held wide consultations with stakeholders and a deep down assessment showed that a double-pronged strategy of reviving consumer demand and reducing cost of borrowing for inducing fresh investment is needed immediately.
Both the RBI and the government are expected to jointly work on a model that infuses more liquidity, especially for sectors like NBFCs, automobile, housing and real estate, the chamber said, ahead of the bi-monthly review of the credit policy by the RBI Monetary Policy Committee. The measures like additional infusion of Rs 10,000 crore by the National Housing Bank into the housing finance companies are certainly welcome. The chamber said, while the RBI has already cut the Repo rate by 75 basis points, the transmission is much less than even half by the banks, which should now be prevailed upon to pass on the reduction in the benchmark policy interest rate.
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