With consumer inflation still trending at the upper end of the apex bank’s band, and the policy repo rate also being substantially reduced by 115 basis points since February 2020, RBI may consider keeping the rates on hold, with an eye on how the inflation and the economic recovery pans out in the coming months. Advance estimates (the Economic Survey) already show that Indian economy may contract as much as 7.7% in FY2020-21 due to COVID-19.
Ideally in this scenario, one would expect RBI to cut repo rates in order to boost more demand. As is, the real estate industry’s perennial hope is fixed on lower interest rates. Given that housing demand is seeing green shoots of revival, especially in the wake of developers discounts and freebies and reduced stamp duty charges (in Maharashtra), further cut in repo rates would have given an added boost to the residential segment.
However, we may see RBI to maintain status quo in repo rates.
Anuj Puri is the Chairman of ANAROCK Property Consultants.