What are your views on the recent repo rate cut by RBI?

There are no surprises loaded in the recent bimonthly monetary policy of RBI as the cut of 25 percent was largely expected. The bank has played a conservative role as inflation is also under control. The cut also fosters its outlook towards growth especially if the economy does not recover from the slow-down till August. There is an apparent change in stance as reflected by the statements by the RBI Governor Shaktikanta Das who has said that he will ensure systemic liquidity remains the top-most priority for the Central Bank. There will be a shift of stance from neutral to accommodative. An internal working group will also be established for reviewing the existing liquidity management framework. The Central Bank has also announced various measures like a decrease in leverage ratio as per the Basel norms for banks which are bound to increase their lendable resources. The RBI has played its part well, the focus will now shift to the Finance Ministry and the policies of the new government.

Topics: GS-III: Indian Economy Issues Relating to Planning