The latest review of the monetary policy would have disappointed most people as many were looking at the new RBI Governor, Raghuram Rajan, to make radical economic changes. However, high expectations of him providing all the solutions to the ailing Indian economy are grossly misplaced and unrealistic, said Sanjay Dutt , Executive Managing Director, South Asia, Cushman & Wakefield.
“The RBI Governor has stuck to his mandate of managing the monetary risks which continue to be highly prone to inflationary and currency devaluation risks. For the real estate sector, the increase in the repo rate is going to have some downside in a stressed environment that is already plagued by slowdown in sales, increasing input costs, liquidity issues and high costs of capital,” he said.
“However, it is the government’s job to tackle these issues by implementing necessary reforms that ensure speedy development of infrastructure necessary for growth of the markets, more transparency in the regulatory processes, improved access to funding sources for both developers as well as buyers and better regulation of the industry on the whole,” said Mr. Dutt.
According to the Confederation of Real Estate Developers’ Associations of India (CREDAI), the apex body for private real estate developers in India, “We are surprised by the RBI decision to increase the repo rates by 25bps in the recent review of the monetary policy. The step is only aimed at combating inflation but the focus on industry growth has been ignored.”
C. Sekhara Reddy, President, CREDAI-National, said, “In these challenging times the RBI decision to raise the repo rates by 25bps is tougher than expected and could have been avoided. In the coming months we hope the bankers will come out with special schemes to attract home buyers.
The RBI should formulate a special policy for the housing industry with focus on affordable housing.”