In its first monetary policy meet after the Union Budget 2023, the Reserve Bank of India (RBI) has hiked the repo rate by 25 basis points. This is the sixth time the repo rate has been hiked by the Reserve Bank of India since May last year, taking the total hike to 250 basis points with the latest increase.
The central bank said that its policy stance remains focused on the withdrawal of accommodation.
“Repo rate now in positive territory. Further action is warranted in India,” noted RBI Governor Das.
Reacting on RBI’s latest move, Dr Niranjan Hiranandani -National Vice Chairman- NAREDCO, stated the economic survey evidently indicated the upward growth trajectory of the Indian economy, corroborated by RBI pegging the FY23-24 GDP growth rate at 6.4 per cent.
“Indian economic resilience is reflected with improved capex, enhanced capacity utilization, improved urban and rural consumption, augmented investments and jobs creation. The geo-political tumultuous, recession signals, and weakening of western economies will reorient the growth scale towards the booming economy of India.
“This phenomenon will continue to draw high global traction which will fuel the demand across the real estate asset classes. The pricing index of the affordable housing segment will have detrimental cascading impact due to projected sticky core inflationary trend. Though surplus liquidity will power credit growth in the real estate sector, demand economics may be challenged in the affordable house segment – which is the broad spectrum of the consumption pyramid.
“The outrageous hike of 250 basis point since May 2021, needs to be warranted before it turns negative for the ascending Indian economic growth curve. The impact of home loan interest rate hike will be highly deterrent in the affordable housing segment as it will impact the price sensitive homebuyers and fatigue the supply of the developers.
“The luxury and mid housing segment players will remain cautious with a bit longer sales cycle.”