Real Estate Developer’s Views II RBI #Monetary Policy
According to Mr. Gaurav Gupta, General Secretary, CREDAI Raj Nagar Extension, “RBI has held the Repo Rate unchanged at 6.65 percent, Reverse Repo Rate at 6 percent and Cash Reserve Ratio at 4 percent which was down the expected lines. Increasing crude prices, implementation of 7th pay commission and monsoon which is predictable to be good this year are also factors for keeping the interest rates constant in this monetary policy. Therefore, keeping the rates unchanged might be a wait and watch policy for the central bank. However a further reduction in rates would have improved the real estate sentiments and prop up growth too. Real estate is a sector which is already recovering from slowdowns and any cut in rates would have positively affected the real estate market further improving the demand by home buyers too”.
According to Mr. Deepak Kapoor, President, CREDAI Western UP, “It was an expected move from RBI to hold back the interest rates considering inflation and crude oil prices. Also in the last policy review the rates were reduced by 25 basis points. It is also expected that country would receive above normal monsoon which might soften inflation in coming days therefore maintaining status quo was anticipated. Although even a small cut in interest rates would have helped real estate sector in a big way but we are eyeing for healthier market conditions ahead. Slashing down the policy rates at this moment would have had a remarkable impact in boosting the realty sector and facilitating growth. Moreover, RBI should compel banks to pass on the benefit of reduced rates to borrowers as only few banks have reduced the interest rates”.
According to Mr. Pankaj Goel, Secretary CREDAI NCR, “RBI was expected to pause on the interest rates in this bi-monthly policy and there was little room for further cuts considering current repo rate which is already running behind the medium term CPI inflation of 6.9%. Also this move came as a wait and see policy as U.S. rate hike is anticipated and any shortfall in the expected rains might lead to upsurge in food prices. However, there could be rate cuts in the next policy reviews if forecasts for good rains come true. But then any amount of rate cuts would have brought cheers to realty sector as it would have directly impacted the borrower’s sentiments and demand for homes. We were expecting rate cut as real estate being a rate sensitive sector would have been benefited in a big way by reduction in rates, further creating a positive environment for realty market.”
According to Mr. Prashant Tiwari, Chairman, Prateek Group, “RBI’s announcement to keep the interest rates unchanged signals that our economy is on the right track of growth. GDP growth was recorded at 7.9% in the January-March quarter making India one of the world’s fastest growing economies. Maintaining the status quo on policy is also in line to restrain inflation expectations. However, reduction in interest rates would have optimistically affected the real estate sector and would have enhanced the growth in realty sector. The announcement seems to be a balanced move by RBI as a decent amount of rate cuts have already been given in previous policies to stimulate growth. Now, it’s the lending banks who need to take actions and pass on the reduced rates to loan borrowers.”
Mr. Vaibhav Jain, Chairman, Rise Group said, “Led by our expectations RBI has refrained itself from cutting the policy rates in this monetary review. The move came as a result of surging oil prices, implementation of 7th pay commission which may lead to inflation and the-soon-approaching monsoon which is expected to be normal or higher than normal after 2 years of rain deficiencies. But a rate cut of even as small as 25 bps would have triggered positive sentiments in realty market as this small cut also means a lot to borrowers and provides huge savings in the long run”.
According to Mr. Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes“RBI keeping the interest rates unchanged is not of any surprise as these expectations rose after (CPI) consumer price inflation moved north to a more than expected 5.39 percent due to higher food prices. The move also came to accelerate economic growth and to stick to the fiscal deficit targets of the government. The decision to hold back interest rates might also have to do with global crude oil values and inflation as well. Hopes for better rains this year is also an influencing factor for maintaining status quo. But then rate cuts are also important to lower the cost of funds and spur investments in a sector like real estate which is one of the biggest contributors in India’s GDP growth”.
According to Mr. Sanjay Rastogi, Director, Saviour Builders Pvt. Ltd. “The move to keep policy rates untouched came as per our anticipations with growing concerns about risks of inflation. On the positive side it is also an indication that economy of our country is on track of improvement. In the past year, RBI has given good amount of rate cuts to spur economic growth but lending banks have still not passed the reduction of interest rates to borrowers. It’s important that banks pass on this benefit to borrowers too so that they feel encouraged to invest in properties”.
