The Reserve Bank of India (RBI) continued with its accommodative monetary stance to revive economic growth; the expected rate cut (25 bps) happened – the RBI Governor Shaktikanta Das pointedly mentioned that the rate cut should be seen in the backdrop of the 110 bps cut already done this year.
From an economic scenario, the 135 bps cut over the year and related measures are welcome. The moot point lies in transmission of the rate cuts in form of reduced EMIs. Till now, monetary transmission has been staggered and incomplete; measures to ensure this happens will go a long way in improving market sentiment, in turn impacting the economic scenario.
When one looks at the Government’s stimulus measures to help strengthen private consumption and spur investments, from a real estate’s perspective, the need is to supplement the same with a one-time roll-over, as was done during the Lehman Brothers crisis.
The time is apt for the One-time roll over announcement, as even those with positive net-worth are gradually becoming negative because of the short term liquidity squeeze. The roll over will act as a remedy for the ailing companies to restore its business. The cascading effect of such schemes will complement the auspicious festive spirit helping industry to spur up the demand- consumption economics resulting sales uptick.
The RBI Governor mentioned that continuing slowdown warranted intensified efforts to restore growth momentum; the One-time roll over will play its part in achieving the same.
Dr. Niranjan Hiranandani is Founder & MD, Hiranandani Group. His new venture is Hiranandani Communities. He is President (Nation), National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing & Urban Affairs, Government of India, as also Vice President, ASSOCHAM.