Real Estate

25 basis points cut in policy rate is short of expectation: Knight Frank India

Anil Urs Bengaluru | Updated on October 04, 2019

Surendra Hiranandani, CMD, House of Hiranandani. File photo   -  Bijoy Ghosh

This is the fifth consecutive rate cut by the RBI this year

The 25 basis points cut in policy rate by the Reserve Bank of India (RBI) is tepid and more needed to stimulate demand, said the real estate sector.

Reacting to Reserve Bank of India’s (RBI) move to cut rates, Shishir Baijal, Chairman & Managing Director, Knight Frank India said “In light of the ongoing economic distress in the country, the 25 basis points cut in policy rate is short of expectation.”

While it is the fifth consecutive rate cut this year, it is insufficient to support the flagging consumer demand. “The stressed real estate sector was looking up to a strong rate cut and sector specific lending provisions to improve both liquidity scenario and consumer spending ability,” said Baijal.

He added, “As has been witnessed so far, a cumulative 110 bps Repo rate cut over the last six quarters has failed to stimulate consumer demand as well as private investment in the economy.”

In line with expectations

Ramesh Nair, CEO & Country Head – India, JLL said, “The 25 bps rate cut is definitely a welcome move showing the alignment of monetary and fiscal policy initiatives in the backdrop of a downward revision in the GDP growth to 6.1 per cent for FY 20.”

The fourth consecutive rate cut during 2019 by the RBI is aimed at uplifting the growth trajectory of the Indian economy.

“The rate cut of 25 bps delivered by the RBI in its fourth bi-monthly monetary policy meeting is in line with the market expectations. This move is in sync with the Government’s efforts to accelerate economic activity. Globally, the efforts are being directed to revive growth through rate reductions. Despite upside risks to inflation expectations due to volatile crude oil prices and currency fluctuations, the decision to revive growth needs applause,” he added.

Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani commented, “With the festive season round the corner, we definitely welcome this move as people make huge purchases during Navratras and Diwali. The real estate sector has been looking forward to such initiatives to boost sales as it is highly sensitive to interest rate movements. This further reduction of repo rate will not only bring down the lending rates but also incentivise investment and boost consumption.”

“The Government has already announced a series of measures including steepest cut in corporate tax amongst others to jump-start growth and revive the sagging economy,” he explained.

Published on October 04, 2019

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