Repo Rates Unchanged! Industry eyes 2015 to bring some relief Fifth time in a row, Reserve Bank of India Governor Raghuram Rajan left the interest rates unchanged. In a recent decision, RBI kept the repo rate unchanged at 8 per cent and the cash reserve ratio at 4 per cent. Since many in the industry were expecting a cut on the interest rates, the decision has disappointed few stalwarts. Talking to CommonFloor, J P Gupta, vice president, CREDAI NCR said, “While we have full faith in the new government & the RBI, the announcement about the interest rates remaining unchanged is disappointing. With inflation largely under control, cheaper housing loans have become the need of the hour, as they won’t just fulfil aspirations, but also have a ripple effect on growth. Since housing affects demand in several other industries, it would have boosted the overall sentiments in the market.” Few felt that RBI is only looking towards taming inflation and is overlooking the pressure being borne by key sectors. “The recent fall in manufacturing growth is a live example. The overall GDP growth forecast has also been cut by many experts. RBI should understand that curbing inflation at the cost of growth is not a wise step,” opined Pradeep Jain, chairman, Parsvnath Developers Ltd. Somewhat similar views were echoed by Rohit Raj Modi, president, CREDAI NCR. Sharing his opinion, he said, “it is quite evident that RBI is under the status-quo. It is looking towards curbing inflationary factors. However, a rate cut would have been a boon for the sector at a time when it is coming out of a not so good festive seasons. A mere reformatory announcements from the government would not do much if it is not supported by monetary liberty.” However, with strong indication that rate cuts could come early in 2015, the move garnered some positive responses as well. P Sahel, vice chairman of Lotus Greens Developers Pvt. Ltd says, “the decision by the central bank to keep the Credit Reserve Ratio (CRR) unchanged at 4% is a sign of improvement signalling the march of economic recovery. This decision by central bank also reflects the interest of concerned financial authorities to stabilize the economy at the time when soaring interest rates & liquidity crunch are creating an extra pressure on overall growth across sectors.”
For some, the move is a strategy to control inflation is a long-term goal of the government. “The FDI in real estate sector was a much awaited kick start move for the Indian Economy, but the current need of the hour for this sector was an immediate liquidity. RBI’s decision to keep the CRR, Repo and reverse repo constant, in my opinion is a strategy to control inflation is a long-term goal of the government,” said Dhiraj Jain, director of Mahagun Group. All said and done, “the real estate industry is now looking forward to an interest rate cut as inflation has fallen significantly and the real estate market continues to be slow,” opined David Walker, MD of SARE Homes. As of now, the only ray of hope seems to the strong indications given by Mr Governor that next financial year could see major reduction in policy rates. Manish Agarwal, MD, Satya Group & Secretary, CREDAI NCR believes that there is no harm in waiting for three months if a strong pitch of sound economic indicators is being given touch ups in this period for spectacular game of economic growth thereafter.” Believing that the wait won’t stretch too long, Nikhil Jain, CEO, Ramprastha Group is of the view that ‘the show must go on’. He said, while we are yet to see the rate cut, “the industry should move and build on the momentum provided by the positive announcement of FDI in Real Estate.” Well, what will happen in next monetary review, only the time will tell. However, let’s hope for the best! Source: CommonFloor.com For Latest Updates on Real Estate Updates, Property News and Cities Infrastructure Developments Visit: http://www.commonfloor.com/guide
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