Is an additional repo rate cut on the cards? Experts decode

Several financial experts are of the opinion that the Reserve Bank of India may go the whole hog towards reviving demand with a further repo rate cut of 25 basis points. This could be likely at the MPC (monetary policy committee) meeting on the 4 of August, with the final announcement likely on the 6 of the month. CPI (consumer price inflation) stood at 6.09% for June, 2020 with higher prices of food products, particularly pulses, fish, meat and cereals although the Government has entrusted the job of keeping this at 4% to the RBI. 

The apex bank majorly takes CPI into account while creating its monetary policy for the country. Experts like principal ICRA economist, Aditi Nayar feel that 25 basis points and 35 basis points could be the quantum of cuts in the repo rate and reverse repo rate respectively. She is seconded by the Managing Director & CEO at Union Bank of India, Rajkiran Rai, who feels that a repo rate cut of 25 bps may be likely or the bank may hold onto its current accommodative stance. The latter view is seconded by several other experts as well. Chamber of industry Assocham has urged the RBI to emphasize on restructuring of loans in order to solve industry problems across sectors. 

Chief Economist & Head-Research at Bandhan Bank, Siddhartha Sanyal, has opined that the RBI may retain its accommodative policy with further reduction of rates of interest and targeted liquidity infusion. Tanuj Shori CEO and Founder at Square Yards, India predominant real estate aggregation and transactions platform, has stated that in light of the current struggle of economic activities to gain positive headwinds and strength in the country, the monetary policy committee (MPC) of the RBI should consider additional policy rate relaxations. 

He has opined that along with a cut in rates of interest, the Indian Government should also look into the possibilities of lowering stamp duty. This will be a massive boost for the country real estate sector that employs in excess of 50 million individuals while being a key contributor to the GDP of the nation too.