Upward GDP projection and no change in interest rates welcomed by industry and economists

New Delhi [India], June 7 (ANI): Industry leaders and economists widely accepted RBI's monetary policy stand of no change in interest rates. Besides upward projection of GDP growth for FY25 from 7 per cent to 7.2 per cent is welcomed by the industry.
Industry leaders have expressed optimism for the economic growth, Dr Anish Shah, President of the Federation of Indian Chambers of Commerce and Industry (FICCI) praised the RBI's revised outlook.
"We are encouraged by RBI's outlook on growth in FY25, which has been revised upwards from 7 percent to 7.2 percent. The forecast for inflation for FY25 has been maintained at 4.5 percent. This is positive and reflects RBI's stellar actions in proactively addressing risks, thus keeping the economy on a strong momentum," he said.
The decision to keep rates unchanged is also seen as beneficial for home loan borrowers, as it helps in maintaining affordable home loan interest rates. However, real estate leaders have called on the new government to further reduce rates and announce special incentives to stimulate the sector.
"Amidst the Federal Reserve's pause in the rate-cut cycle, Indian economy watchers are intrigued by changes in both the domestic and geopolitical landscapes. The industry expects the new government to lower interest rates, announce fiscal incentives, and rationalize taxes," said Dr. Niranjan Hiranandani, Chairman of the Hiranandani Group
Investment advisors and economists also interpreted the unchanged repo rate as a potential precursor to future policy shifts, emphasizing the solid growth prospects indicated by the increased GDP forecast.
"RBI kept the repo rates unchanged, this suggests that the RBI may be preparing the market for a change in stance in the upcoming meeting. On a positive note, the RBI upgraded the GDP forecast to 7.2% from an earlier projection of 7%, indicating solid prospects for the domestic economy in the future," said Naveen Kulkarni, Chief Investment Officer at Axis Securities PMS.
Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, supported this view, highlighting the potential for future policy adjustments. " We believe the robust growth will give enough opportunity for the MPC to remain on a wait-and-watch mode until better clarity comes from monsoons and quality of expenditure from the Budget. We see room for stance change in the August policy with a plausible easing from October meeting" she said.
But economists raised concerns about rising food inflation, which continues to be a significant driver of overall inflation in India.
"Food continues to drive the gauge in India, food inflation was 8.7% in April, while non-food was a subdued 2.4%. Our base case is a normal monsoon trimming the headline to 4.5%. The RBI has kept its inflation forecast this fiscal unchanged at 4.5%. CRISIL's estimate is a tad lower at 6.8%," said Dharmakirti Joshi, Chief Economist at CRISIL.
Overall, industry leaders' comments reflect cautious optimism about India's economic outlook, recognizing the RBI's efforts to balance growth and inflation while signalling potential policy adjustments in the near future. (ANI)