HYDERABAD: Dashing the hopes of many, the RBI kept interest rates unchanged at 8 per cent at a policy review on Tuesday. This means no loan is going to get cheaper anytime soon. All that the RBI said was it could ease monetary policy early next year provided inflationary pressures do not reappear.
Little wonder, industrialists, home loan borrowers and prospective borrowers of home loans, disgruntled as they were, slammed the RBI’s decision, stating that they expected some rate cut, considering inflation is under control.
Real estate developers, who had pinned a lot of hope on rate change, advocated a reduction in interest rates to facilitate lowering of entry barriers and spur demand for the real estate sector and free home loan interest rates from inflation expectations, keeping in view the mission to provide housing for all by 2022. But even their expectations evaporated with Tuesday’s RBI decision. C Shekar Reddy, president of CREDAI-National, said: “The RBI’s decision to keep the key rates unchanged will not help the real estate sector.”
Echoing similarly, industrialists lashed out at the RBI for being insensitive at a time when the industry is struggling to keep pace with the global players. “We are in complete disagreement with RBI’s decision as we wanted a rate cut. With the interest rates being so high, industrial production is very, very low. Per capita industrial production is negative, since we are growing per capita at 2 per cent and industrial production is less than 1 per cent, which means we are in recession. Interest rates at such a high level is killing the industry further,” said Devender Surana, national executive, FICCI.
Surana said they are forced to compete with the rest of the world where the interest rate is below 2 per cent. “We are forced to pay 12-14 per cent which is six to seven times the interest rate internationally. So, it is almost impossible to compete”.
Home loan borrowers voiced similar concerns and expressed disappointment that there was no dip in prices. “We are obviously very disappointed since we were expecting a rate cut. Even the Finance Ministry had advised the RBI to reduce the interest rates but the bank has not budged. This is very demoralising,” said Surya Narayana, a corporate lawyer in the city.
Ravisekhar Rao, a maths lecturer, said: “I understand the importance of controlling inflation but when it is relatively under control, I’m sure we can afford to minimise the rate just a little bit. I’m not stupid and don’t expect huge rate cuts but for there to be none at all is disappointing to say the least.”