Rate cuts and economic revival

30 MAR,2020 | MEDC


The market was expecting a rate cut this time, and the RBI Governor did not disappoint. The Central Bank cut the repo rate aggressively by 75 basis points (the sharpest in over a decade), ostensibly with a view on the deteriorating economic situation due to Covid-19. The RBI has also allowed almost all borrowers to defer loan repayments by three months, which is the need of the hour. The RBI has provided the economy a shot in the arm for its sustained recovery, and industry needs to respond appropriately. Our economy is on a reform path and a temporary demand and supply shock should be adequately managed. A multi-faceted crisis like this has the potential to disrupt business sentiment, and the rate-cut and moratorium on term loans will go a long way in boosting corporate confidence. The RBI has provided the economy a soothing balm at this critical juncture.

*Photo Credit: Google

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