MUMBAI, 04 APRIL, 2016: The Reserve Bank of India (RBI) Governor Raghuram Rajan is scheduled to announce the first bi- monthly monetary policy for 2016-17 on Tuesday, 05 April 2016. “Giving a boost to growth, and countering the negative industrial outlook might make a fit case for a possible rate cut,” said Niranjan Hiranandani, MD, Hiranandani Communities and Founder-President National Real Estate Development Council (NAREDCO - Maharashtra).
“Going by media reports, inflation is likely to remain low, at 4.75 per cent year-on-year for the quarter ended March 2017,” said Niranjan Hiranandani. “While it seems likely that the RBI Governor may opt to cut rates on 05 April, the other side of the argument is that the RBI Governor might maintain a ‘status quo’, given the Union Budget and its focus on infrastructure and agriculture. “He might want to wait for the next bi-monthly review before making any changes,” he added.
If the RBI Governor looks at the aspect of inflation being in control and opts to go in for a rate cut, said Niranjan Hiranandani, at this point of time the rate cut will definitely help reduce the overall burden for home buyers; and this can potentially, boost residential real estate sales. “Going by the economic scenario, I would expect the RBIto possibly cut rates by 25 basis points on 05 April,” he added.
“The one scenario in which this 25 bps rate cut - which is expected in April - might not happen, is the impact of recessionary trends in the global economy, which can delay India's economic growth story. On the other hand, inflation remaining along the expected numbers might mean possibility of rate cuts - if not on 05 April, possibly in the next review in June,” added Niranjan Hiranandani.
“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 will strengthen the case for the RBI Governor to cut interest rates,” 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.