The Reserve Bank of India has lowered the repo rate by 25 basis points for the first time in six months to 7.75 per cent to prop up the economy which is set post its slowest annual growth rate in the last ten years. The RBI also lowered the cash reserve ratio by 25 basis points to four per cent. This move is expected to inject Rs 180 billion into the economy.
The auto industry, which currently suffering a slowdown of sorts, is expected to benefit from the move as it will bring down the EMI on loans and this will make buying a car more viable. However, this is dependent on the bank to reduce amount on the instalments.
Commenting on the development, Pawan Goenka, President Automotive and Farm Equipment Sectors, Mahindra & Mahindra, said “over the past few months, the economic growth has clearly bottomed out and the slowdown in manufacturing is a concern. Today’s combo of a repo as well as CRR cut is a welcome announcement and hopefully will help revive investments in the core sectors which the economy needs. Coupled with the recent policy announcement by the Government, I see this as a good beginning.”
