Commendable Measures, Under The Circumstances
Anurag Mathur, CEO, Savills India
The RBI has underscored the magnitude of stress that has crept into the economy as a consequence of the global pandemic. By forecasting a negative GDP growth, as well as highlighting sharp shrinkage in industrial production and export, the RBI governor gave several indicators outlining the difficult path ahead.
Considering these challenges, the RBI, as expected has yet again acted positively by lowering the repo rates by 40 bps taking it to 4%. Further, by extending the moratorium by another three months, it aims to ease the financial burden of several mid to small sized businesses, which are faced with negligible cash inflows. Both of these are commendable, under the circumstances.
Lowering the rates may help accelerate the decisions of a section of home buyers, in the next few months, if not immediately. It will also help in reducing the EMI burden of customers during such grave times, provided the banks pass down the rates. However, these measures alone may not create a demand base for the overall revival of the real estate market. A significant advancement on financial, economic and social security will be needed in the medium term.