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Accommodative stance necessary to revive growth: Dr. Hiranandani RBI needs to be more hawkish to tame inflation

Accommodative stance necessary to revive growth: Dr. Hiranandani  RBI needs to be more hawkish to tame inflation

The RBI kept the repo rates unchanged to 4% and the reverse repo rate to 3.35% on the monetary policy review meeting today. The decision holds good news for the prospective buyers in the realty sector. Here are the views of industry players on the same:

Dr. Niranjan Hiranandani, President (National) NAREDCO

The monetary policy committee’s decision to keep key rates unchanged was on expected lines and may continue in the near future to support growth as private consumption has slowly started and several stalled projects have been revived due to the government’s efforts, stated ASSOCHAM and NAREDCO National President, Dr. Niranjan Hiranandani.

The repo rate is kept unchanged at 4 percent and reverse repo rate too stands unchanged at 3.35 percent. The Reserve Bank of India needs to have a hawkish stance while looking at the inflation figures and try to taper it further in order to mitigate the supply-side pressure.

“The pro-active stance of the government to tackle the supply side issues would be instrumental in reducing the food prices further. As the numbers show that the economy is recuperating at a quicker pace than anticipated is a very good sign. There are several sectors which are showing an upturn consolidating the fact that the GDP growth numbers would be positive soon,” he added.

Home loans will continue to remain at attractive rates, this should augur well for home buying sentiment,” he added.

“The projected real GDP growth for FY21 at -7.5 per cent vs -9.5 per cent projected earlier augurs well for the recovery story. Q3 growth is seen at 0.1 per cent; Q4 at 0.7 per cent bears out the RBI Governor’s statement on business sentiment of manufacturing firms ‘gradually improving’. RBI Governor’s proposal to expand on-tap TLTROs to cover other sectors is a positive move, the important thing he pointed out being that economic constraints have started to ease,” he concluded

Limit for contactless card transactions to be raised from Rs 2,000 to Rs 5,000 per transaction from January and the announcement to make the RTGS system operational round the clock is a welcome step, Dr. Hiranandani said.

The RBI announced that after the dismal 23.9 percent contraction in the April-June quarter, the economy has recovered with the July –September quarter contracting to 7.5 percent. The industry is anticipating the Jan-March quarter to be positive, he said.

Anuj Puri, Chairman – ANAROCK Property Consultants

As was expected, the RBI has kept the repo rate unchanged. The threat of inflation looms large – it currently hovers above 7% – and the apex bank is tasked with reining it in while simultaneously fostering the green shoots of resuming consumption. On the positive side, an unchanged repo rate will ensure that home loan interest rates will not harden anytime soon. It is quite clear that increasing interest rates would impact overall demand at a time when the government is keen to boost consumption.

However, there is no denying that consumer inflation is at the upper end of the apex bank’s band, and the policy repo rate has already been substantially reduced by 140 basis points in 2020.

It goes without saying that the real estate industry’s perennial hope is fixed on lower interest rates. This would be enabled by reducing the repo rate – a least in theory, given that transmission of reduced repo rates to bank interest rates has been slow at best. With real estate demand gradually returning, especially in the wake of developers’ discounts and freebies and reduced stamp duty charges (in Maharashtra), reduced repo rates would have given an added boost to the ongoing festive season.

Mr. Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory

“Owing to inflation concerns and steep reductions previously, the RBI was expected to keep rates unchanged. With commercial banks being asked to consolidate profits and not distribute dividends, it’s time the banks further sweeten the lending rates. With vaccine announcements around the corner and persistent recovery in the economy, the country can be expected to fully recover financially by the end of Q4 FY 20-21.”

Mr. Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani

The RBI’s decision of keeping the repo rate unchanged was on expected lines owing to the rise in inflation in recent months. Even though the apex bank has kept rates unchanged, we still believe that there is room for financial institutions to cut down on their lending rates. Now the entire focus would be on how the government plans to combat the economic slowdown and boost demand. A series of measures in the form of capital injection, refinancing of banking institutions, policy impetus, subsidies, and offers are required to see a faster recovery.

The country’s economy recovered faster than expected in the July-September quarter. The growth in the economy has also been reflected in the real estate activities of the last quarter where both residential as well as commercial markets have seen a sharp increase in activities. Reduction in stamp duty charges in some states and varied offers during the festive season coupled with a rate cut would have surely boosted the buyer sentiment further. Serious buyers have realized that this is the best time to buy.

The real estate industry in particular, stands to benefit due to several measures taken by the government so far. However, there is a lot that needs to be done for the sector to improve the pace of growth. We are looking forward to a bigger rate cut and sector-specific lending provisions to improve both the liquidity scenario and consumer spending ability.

Mr. Bhushan Nemlekar, Director, Sumit Woods Limited 

“Keeping the inflation in mind, the RBI was expected to keep the rates unchanged. The real estate sector already had a good festive season and we can see the recovery is expected to strengthen further. The sector is already optimistic because of the increased buyer interest in real estate assets and we expect the demand to sustain in the next quarter as well.  The RBI has already announced several favourable measures this year for the real estate sector; however, more needs to be done such as the decision on Input Tax Credit and reduction in premiums at the State Government level.”

Pankaj Bansal, Director, M3M Group

The decision of unchanged RBI repo rate and reverse repo rate is a smart move by the government. The government has taken favourable decisions to support the real estate sector in the past few months which has positively impacted the market sentiments and will improve further in the post COVID era. In the past quarter, the sector has seen a robust response in terms of sales across spectrums. This move will further encourage prospective buyers to invest in the realty sector.RBI

Dr. Kunal Banerji, Advisor to the CMD, Central Park  

We welcome the move from RBI that aims at keeping the repo rate unchanged. This will ensure an easy flow of money to the people in the country. This has given a positive ray of hope to the consumers who require a home loan and looking forward to possessing a new house. As people want to attain satisfaction and security of owning a house during this pandemic, the boost in this desire is given by the constant rate of interest on home loans, which is not going to rise soon. We expect that this move by the government will give another boost to real estate.

Santosh Agarwal, CFO, AlphaCorp

The decision to keep the RBI repo rate and the reverse repo rate unchanged is again a great step by the government. With the economy growing post unlock, the housing sector is utilizing the opportunities due to various RBI decisions in the past few months. As a result, the sector has witnessed favourable market sentiments and increased sales in the past quarter. This will further continue to encourage banks to lend money to the housing sector and ensure improved credit flow. We hope to see further seamless support to the sector in the post-COVID era. This will revive cash flow in the country and maintain financial stability.

Mr. Murali Malayappan, Chairman and Managing Director, Shriram Properties Ltd

We welcome RBI’s decision to keep policy rates unchanged as it will lead to continuation of low interest rate on home loans. This along with the positive economic growth forecast for the second half of this fiscal will boost the housing demand. Well established players like us would see an increased rate of sales in the coming quarter, through this.

Honeyy Katiyal, Founder-Investors Clinic

The unchanged repo rate is a welcome step by the government as it indicates that home loan interest rates will not increase anytime soon. Increased interest rates would have led to a fall in demand for the home buying segment. The government, at this point of time, is aiming towards boosting consumption for all the sectors. Q2 of FY’21 also witnessed a surge in consumption hence RBI keeping the repo rate stagnant is a positive step towards keeping inflation under control.”

The policy support provided by the government will continue to boost residential real estate.

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