Repo Rates

20190809

The Reserve Bank of India in this financial year for the 4th time in continuation reduced the Repo and Reserve Repo rates. The RBI cut the Repo rate by 0.35 basic point to make it 5.40 from 5.75 per cent. The Reserve Bank Governor Mr.Shashikanta Das has lamented the despite rate cut, by the RBI the banks were not passing it over to bank customers by effecting cut on bank loan interest rates. The SBI has taken a policy decision that it has linked its interest on deposits and loans to RBI Repo rates. Now SBI interest rates move up and down automatically on the basis of RBI rates. The other commercial and private sector banks should also follow the SBI line of linking, its deposit and loans rates with the RBI rates. The RBI has reduced the Reserve Repo rates by 5.15 per cent. The most important factor that has emerged that at this time the Repo rates are the lowest in the last nine years. The RBI has revised the GDP growth rate downward from 7 per cent to 6.9 per cent. It is reflection of the lofty announcement of the Prime Minister Mr.Narendra Modi of his resolve to upgrade the Indian economy upto 50 trillion rupees. The economic ranking of India has gone down from 5th to 7th position in the world ranking. The RBI Governor Mr.Dass has indicated that further cuts in the bank lending rates would depend the economic progress of the country. It means that for further cut, there must be progress in the GDP growth rates. The RBI priority is on increasing the private investment in the country. The Prime Minister Mr.PV Narasimha Rao changed the economic policy of the Government from public sector to private sectors. There is disinvestment in the losing public sector undertaking. With the nationalization of private sector Tata Airlines and Bharat Airways of House of Birlas to form public sector Air India. But it had incurred so much loss that Government it selling it off but response is very poor because Air India is not only in huge loss but in huge debt also. Mr.Narasimha Rao also opened the economy for foreign investment and Congress led UPA Government expanded it. But the BJP Modi Government has gone much further by inviting foreign multi nationals to come to India under “Make in India” policy to set up its plants industries in India to manufacture in India itself. It has shown results that Civil Aviation grant of making civilian passenger planes the Boeing of America and Indo-French venture of Air Bus are coming to India to set up their mega plants in India. But in Railways the foreign investment is not forthcoming as expected. The rail infrastructure is in very bad shape. It has no finance to open new rail lines as existing railway track need replacement urgently. The fracture and damages in the track causing rail accident. Investment are prime need of the country. The RBI rates cut a way towards it.

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