|| SHANIWAR SAMWAD || 12-08-2023

In latest RBI's MPC meeting the decision on rate was as expected. There is no change in repo rate and other rates. The inflation is on higher side with seasonal rate hike of vegetables like tomato and onion.

Now, it is recognized that our seasonal rate increase in vegetables and fruits with some staples is annual ritual as we do not have adequate storage facility for it.

Market needs stability in rate for some more time as it is going to stabilize MSME sectors as the planning for them will be easy to expand business. So the retail sector, in which maximum no. of borrowers are home buyers, they will not face issue of increased EMI or elongation of tenure of loan.

It is true that cost of capital for long term loans are high in comparing to short term loan, but the system of calculation is opaque, which needs transparency so that a borrower must  take call prior to  taking loan and his consent is needed to hike EMI amount or loan tenure elongation.

Presently, rate hike automatically increase EMI amount but when rate reduces borrower have to pay fee to get reduced its EMI or tenure.

But the rate hike pause is best decision and will give much needed help in expanding the market.

Other major event of the week  was NO CONFIDENCE MOTION, in which our Prime Minister assured the country that we will be third biggest economy of the world, here we like to differ with the PM as we think we will be second largest economy of the world by 2029.

The situation in world along with China is conducive for it and we are taking right step to achieve that. World is going with CHINA plus one strategy and they are not in position to ignore us as our strategy is conducive for them to achieve their long term goals with us.

Location: India

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