States this will Help in Providing A Fillip to the Economy Directly by Increasing the Private Sector’s Ability and Willingness to Spend as well as Indirectly by Improving the Balance Sheet of the Corporate Sector and Banks, Facilitating an Increase in Demand for and Supply of Credit
New Delhi/Mumbai, January 15, 2015: The Ministry of Finance says that the 25 basis point Report Rate cut announced by the Reserve Bank of India (RBI) is a welcome move and consistent with strong and ongoing disinflationary trends identified in the Ministry’s Mid Year Economy Analysis presented to the Parliament last month.
The Ministry further states that this is a significant move in signaling a shift in stance and direction for policy going forward, as the RBI’s statement has noted.
The Ministry further states that this move will provide a fillip to the economy directly by increasing the private sector’s ability and willingness to spend. It should also help indirectly by improving balance sheet of the Corporate Sector and banks, facilitating an increase in the demand for and supply of credit.
The Ministry further states that along with other policy actions already taken by the Government and other that are under its consideration, this move represents one more step towards reviving investment and realizing India’s medium term growth potential.
Meanwhile, S. Ramasamy, Chief Investment Officer- Debt, LIC Nomura Mutual Fund, regarding RBI cuts repo rate, says: “The RBI rate cut signals the turnaround in the economy to the positive side. This may be followed up by rating agencies for a rating upgrade for India which will propel more FII flows into the country making the Indian Currency stronger and stable. With the downward trend in the commodity prices the rate cut will boost Investment and consumption which is positive for Growth”.
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Thursday, January 15, 2015