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India’s central bank expected to cut rates as growth potential goes unrealised


India’s central bank expected to cut rates as growth potential goes unrealised

reserve bank of india
reserve bank of india
Photo: RBI

India’s Monetary Policy Committee of the Reserve Bank will announce today whether or not it will cut the repurchase rate.

Many are of the opinion that Governor Shaktikanta Das will cut the rate by 25 basis points to 5.75% – the third such cut of 2019.

An economic slowdown has precipitated an acceleration of the rate cut as India continues its two-pronged struggle to attract consistent FDI and encourage consistent domestic consumption levels.

Fiscal stimulation will soon become paramount as, despite a worsening deficit, PM Modi’s campaign promises need to be fulfilled. They include facilitating favourable lending conditions, investing in the ailing agricultural sector and spending $1.4 billion on nationwide infrastructure over the next five years. For analysts, however, these sorts of investments must beget financial infrastructural reform for the sake of long term economic stability.

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Modi’s Indian People’s Party is under pressure in the medium term to create an FDI friendly environment, reduce unemployment and make India into a global manufacturing hub as it attempts to check Chinese influence in the region.

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