As a consequence of increase in both the repo rate and reverse repo rate by half a percentage points each to 7.25% and 6.25% each respectively, the banks and financial institutions are very likely to increase their lending rates sooner or later. The increase can be attributed to a RBI (Reserve Bank of India) guideline. Repo rate is the rate at which RBI lends short term funds to various banks and RBI accepts short term deposits from bank at reverse repo rates.
What even more worrying for the Indian economy is that RBI’s projection according to which the economic growth has lowered to 8% for 2011-12 from around 8.6% in 2010-11. This will inevitably affect the investors as it will bring down the return on investment in the economy.
However in the union budget presented by finance minister, Mr. Pranab Mukherjee on February 28, 2011 the estimation for economic growth during this period was 9% as compared to the current projected rate of 8%. It is 60 basis points lower than the previous year and will definitely affect the mood of investors and other players in the economy of the country. This hardening in the interest rates coupled with the current slowdown in the economy will affect the real estate sector as well.
What even more worrying for the Indian economy is that RBI’s projection according to which the economic growth has lowered to 8% for 2011-12 from around 8.6% in 2010-11. This will inevitably affect the investors as it will bring down the return on investment in the economy.
However in the union budget presented by finance minister, Mr. Pranab Mukherjee on February 28, 2011 the estimation for economic growth during this period was 9% as compared to the current projected rate of 8%. It is 60 basis points lower than the previous year and will definitely affect the mood of investors and other players in the economy of the country. This hardening in the interest rates coupled with the current slowdown in the economy will affect the real estate sector as well.
No comments:
Post a Comment