The Reserve Bank of India’s (RBI) decision to cut the benchmark repo rate after two years by 25 basis points (bps) would encourage investment in exploration and energy transition projects, said industry leaders.
The repo rate signals a supportive approach toward sustaining economic growth, said Pankaj Kalra, CEO of Essar Oil and Gas Exploration and Production Limited.
“This reduction, after nearly five years, will help ease borrowing costs and provide much-needed liquidity to key sectors. For the oil and gas industry, a lower interest rate environment will encourage investment in exploration, infrastructure, and energy transition projects, ensuring a stable and efficient energy ecosystem,” said Kalra.
RBI has maintained the existing neutral stance amidst the volatile external environment. The cut has been driven by increasing concerns on the growth momentum in the economy particularly subdued urban consumption.
Economists believe that the neutral stance highlights that the policy direction might be revised depending on the incoming data points and the external environment
“The monetary policy stance remains neutral, indicating that the trajectory on the rates is uncertain amidst a volatile external environment. This may not induce the banks and other lenders to cut rates immediately (except those linked to the benchmark),” said Suman Chowdhury, Chief Economist and Executive Director, Acuité Ratings & Research.
Experts also said that the cut shows the central bank’s commitment to supporting economic growth while keeping inflation in check.
“The central bank's decision to cut the repo rate reflects its confidence in the resilience of the Indian economy amidst global challenges. As the fiscal year progresses, the RBI will continue to monitor economic indicators and adjust its policies to ensure stability and growth,” said Bajaj Broking Research.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
