RBI’s 9.5 percent contraction forecast was much anticipated: Dr Hiranandani
The Reserve Bank of India’s Governor Shaktikanta Das announcement of keeping the repo rates unchanged while forecasting a 9.5 percent contraction in FY21 was on expected lines stated ASSOCHAM president, Dr. Niranjan Hiranandani.
“It affirms our beliefs that the worst is over for the Indian economy. The RBI governor also confirmed that the contraction in economic growth witnessed in the April-June quarter with 23.9 percent is behind us. He also accepts that growth is likely to pick up in the second half of the fiscal and enter into the positive zone in the January-March quarter,” He pointed out.
According to Dr. Hiranandani, the RBI’s decision to keep key rates unchanged was also much anticipated. “Further reduction in key interest rates was not a possibility at this juncture. The RBI’s decision to extend the scheme for co-lending to all NBFCs, HFC in respect of all eligible priority sector loans will allow greater operational flexibility to the lending institutions and is much welcomed,” he said.
Since February last year, the monetary policy committee has cut the repo rate by 250 basis points.
RBI’s decision to rationalise the risk weights on home loans and link them to Loan to value ratios only will give a boost to the real estate sector as well, he said. “Particularly this step would benefit borrowers of higher value loans. It would ensure that more credit is available to borrowers. This move is a much appreciated step recognising the role of the real estate sector in generating employment and economic activity,” he added.
Dr. Hiranandani explained that the industry welcomes the Reserve Bank of India’s announcement to undertake further measures as necessary to assure market participants of access to liquidity and easy finance conditions. “The RBI has through its proactive measures taken honest efforts to provide access to easier credit to smaller businesses. However, we believe further steps would be needed to revive the economy,” he said.