“Rate cut of 25 bps in RBI’s policy review meet on 05 April a good move, could have been better,”: Niranjan Hiranandani

MUMBAI, 05 APRIL, 2016: The Reserve Bank of India (RBI) Governor Raghuram Rajan, in the first bi- monthly monetary policy for 2016-17 on Tuesday, 05 April 2016, cut the repo rate by 25 bps to 6.50 per cent. The CRR was kept unchanged at 4 per cent.

“The RBI Governor Raghuram Rajan has restarted the rate cut cycle after a six-month pause; it is a good move for the economy – but could have been better,”said Niranjan Hiranandani, MD, Hiranandani Communities and Founder – President National Real Estate Development Council (NAREDCO – Maharashtra).

From a real estate perspective, the RBI move has potential to reduce the overall burden for home buyers; and can potentially, boost real estate sales by enhancing positive sentiment for home seekers, said Niranjan Hiranandani.

The RBI’s bi-monthly policy review suggests it is focusing on liquidity management. RBI Governor Raghuram Rajan’s stance appears to be ‘accommodative’, and I see further scope for rate cuts going ahead, subject to good monsoon and improved transmission of rate cuts to end users, Niranjan Hiranandani added.

“From a home buyer’s perspective, I expect significant rate transmissions by banks and HFIs to enhance positive sentiment in the next few months. The last time the RBI Governor cut key rates was on September 29, 2015; when the repo rate was cut by a larger-than-expected rate of 0.5 per cent to 6.75 per cent. This was a move aimed at boosting the economy and to spur demand,” said Niranjan Hiranandani. “Post the Budget, I expect monetary policy to be supportive of economic growth. Declining inflation and negative industrial outlook seem to have strengthened the case for the rate cut, although market expectations were that it could have been higher, at 50 bps,” he concluded.

~ Niranjan Hiranandani is Founder & MD, Hiranandani Group, his recent initiative is Hiranandani Communities. He is the Founder and First President (Maharashtra), National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.

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