Views on RBI’s Decision on Repo Rate by SECCPL, Arkade & Savills India

New Delhi, December 07, 2019:

Mr Rahul Grover-CEO, SECCPL:

The RBI decision to take a pause doesn’t come as a setback to the real estate sector as a whole, as we already have liquidity in excess of 2 trillion pumped into the banking system. The repo rate has consistently been decreased throughout the year. However, we haven’t yet seen a proportionate increase in lending as of today. Clarity in terms of future guidance on policy rates and liquidity conditions will go a long way towards increasing lending and investor confidence in the real estate sector.

Mr Amit Jain-CMD, Arkade:

Even with the unchanged repo rate, we now have the support of liquidity and the government initiatives to revive the demand from homebuyers. The real estate market as a sector witnessed a slow but rising demand from the end-users in the recent festive period after the last rate cut. Also, despite the slowdown, we have witnessed robust growth in the market due to PMAY and commendable reforms in the affordable housing segment by the Government of India. However, the wheels of change will only churn some results when the benefits of this revision are passed on to the consumer by the banks and inflation is kept under check. We hope this decision will be assertive and reflect from the first quarter of 2020.

Anurag Mathur, CEO, Savills India: 

The Monetary Policy Committee decided to hold the benchmark rates after five successive rate reductions in 2019. This comes at a time when the Indian economy has slid to a six-year low, however, The ‘accommodative’ stance adopted by the MPC today does leave the scope for reduction in the next meet.The purchase of real estate had risen marginally in major urban centres of India during 2018. However, for the Real Estate sector to contribute significantly to the GDP once again, it is essential that consumption increases in much larger volumes. For the sector to generate higher revenues and growth, a stronger impetus is required for a larger mass of consumers.While we think that the rate-cut was quite desirable, the MPC seems to have adopted the view that the key may not lie in rate-changes at present.

The ball has been passed on to the government’s court now. The need would be to increase spending, readjusting its fiscal-deficit targets for 2019-20 and to boost consumption and investments. The MPC had delivered five successive rate cuts in 2019, which was commendable. Its latest position of holding the rates, even if temporary, demonstrates caution amid rising concerns.

Corporate Comm India (CCI Newswire)