RBI keeps rates unchanged, developers disappointed
Jul 31, 2013
Source : The Economic Times

 

MUMBAI: The RBI’s decision to keep the key rates unchanged is letting the entire industry, in general, and housing industry, in particular, down considering the slowdown in the economy and the low investor sentiment in the real estate market. The repo rate or the rate at which RBI lends to the system, has been retained at 7.25 per cent and the cash reserve ratio, the amount of deposits banks park with RBI, has been kept unchanged at 4 per cent. Industry experts and developers expressed disappointment on the no-action.

“The real estate sector, which is already under pressure due to slowdown in the economy, was expecting a breather from the apex bank. But, RBI’s status quo on rates has left us hugely disappointed. The cut in growth forecast from 5.7 per cent to 5 per cent should have alarmed RBI to take some urgent measures to promote development, but that hasn’t happened,” says Anil Kumar Sharma, President, CREDAI-NCR.

“The only positive was RBI’s announcement to roll back liquidity tightening steps in a calibrated manner enabling monetary policy to support growth,” he adds.
Anshuman Magazine, Chairman & MD, CBRE South Asia Pvt. Ltd says, “The RBI’s decision is on expected lines, considering its priority is now to defend the weakening rupee. However, taking steps to support economic growth is also of paramount importance at the moment, considering the low investor sentiment prevalent in the market. The real estate market remains sluggish, and it was the need of the hour to provide a boost to the cash-strapped market.”

“The immediate need is to reduce the Current Account Deficit (CAD) and stabilise the rupee’s slide. This can be addressed satisfactorily by taking measures that will incentivize local and global investments. The RBI must also help prevent further reduction in flow of funds to all sectors of the economy. Prominent amongst these are industries with large capital requirements and employment potential like the real estate and infrastructure sectors,” adds Pankaj Bansal, Director, M3M India.

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