Experts Recommend RBI Rate Cut to Sustain Growth
Economic experts are calling on the Reserve Bank of India (RBI) to implement a 0.25% rate cut in its upcoming February policy review to bolster economic growth and minimize potential sacrifices in India’s recovery momentum.
Growth Risks from Delayed Rate Cuts
India’s economy has shown resilience amidst global uncertainties, but experts caution that delaying a reduction in interest rates could slow down the recovery process. High borrowing costs have been a significant factor in dampening private sector investment and consumer spending. Lowering the repo rate, currently set at 6.5%, is seen as a crucial step to stimulate credit flow and foster economic activities.
An early rate cut would also align India’s monetary policy with the evolving global trend of easing interest rates, especially as inflation levels show signs of stabilization.
Inflation Concerns vs. Growth Priorities
While inflation has been a primary concern for the RBI in recent quarters, experts believe the central bank now has room to maneuver. Moderation in food prices and controlled supply chain dynamics have contributed to easing inflationary pressures, creating an opportunity for policy adjustments without compromising macroeconomic stability.
An immediate rate reduction could encourage borrowing and investment, providing a much-needed boost to key sectors such as manufacturing, construction, and real estate. These industries are critical for job creation and GDP growth, particularly in a post-pandemic economic landscape.
Balancing Act in Policy
Economic analysts have emphasized the importance of a balanced approach in monetary policy. A proactive rate cut would signal the RBI’s commitment to supporting growth while ensuring inflation remains within its target range. Delaying such measures could force the central bank to implement steeper cuts in the future, which might be less effective in achieving desired outcomes.
With India aiming to sustain its position as one of the fastest-growing major economies, timely intervention by the RBI could help maintain momentum and set the stage for long-term stability and prosperity. The February policy review will be closely watched for signals of how the central bank plans to navigate this critical juncture.
