Finance Ministry welcomes cut in repo rate
It said the measure was consistent with strong and ongoing disinflationary trends identified in the Ministry’s Mid Year Economy Analysis presented to the Parliament last month.
The RBI reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect;
The RBI kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL).
The Ministry further stated that this was significant in signaling a shift in stance and direction for policy going forward, as the RBI’s statement has noted.
"This move would provide a fillip to the economy directly by increasing the private sector’s ability and willingness to spend. It should also help indirectly by improving balance sheet of the Corporate Sector and banks, facilitating an increase in the demand for and supply of credit", it said.
The Ministry further stated that along with other policy actions already taken by the Government and other that are under its consideration, this move represents one more step towards reviving investment and realizing India’s medium term growth potential.
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