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In response to the Reserve Bank of India (RBI)’s decision to keep the repo rate steady at 6.5 per cent , Chief Financial Officers (CFOs) across India Inc are expressing optimism about the implications for investment and capital expenditure (capex).
The RBI’s neutral stance is seen as a stabilising force, providing clarity for businesses navigating a complex economic landscape.
India Inc views the RBI’s decision as a crucial step in fostering a stable investment environment. With a collective sense of optimism, CFOs are poised to move forward with confidence in their investment and capex strategies, anticipating potential rate cuts as economic conditions evolve, opined top finance executives.
On Wednesday, in the fourth bimonthly meeting of this fiscal year, the Reserve Bank of India (RBI) decided to maintain the repo rate at 6.5 percent, marking the tenth consecutive meeting where the rate has remained unchanged since its last hike in February 2023.
Stability Paves the Way for Investment
Sneha Oberoi, CFO of Suzuki Motorcycle Private India Ltd, emphasised the importance of stability in decision-making. “Considering the global conditions, we were not expecting a rate cut. This stability has minimum negative impact on any capex decision, allowing India Inc to proceed confidently with investment plans,” she stated.
Gurvinder Singh, CFO of Mitsubishi Electric India, echoed these sentiments, highlighting that investments in India and the growth story will remain intact.
“RBI took the right decision in keeping the repo rate stable at 6.5 per cent and will not impact the investment climate as both Consumer Price Index (CPI) and Wholesale Price Index (WPI) are well under control,” he said.
Confidence in the Economic Climate
The overall confidence level among CFOs regarding the investment climate is notably high. A CFO from a large logistics company who wished to be anonymous, said, “Good capex plans will continue regardless of the lack of a rate cut. The economy is buoyant, and we are optimistic about our investments moving forward.”
Kishore Nuthalapati, CFO of BEKEM Infra Projects, said that the RBI’s neutral stance encourages companies to renew their investment and capex plans as inflationary pressures ease. “This change sends a positive signal to the market,” he noted.
Santosh Agarwal, CFO of Alphacorp Development Pvt. Ltd., described the RBI’s decision as prudent. “This stable interest rate environment is crucial for long-term investment and capex planning. While some reduction was expected, we support this stability, which may further fuel the growth of the Indian economy,” he stated, adding that India’s Gross Domestic Product (GDP) is projected to grow at a robust 7.2% in FY25.
Venkatraman Venkateswaran, Group President & CFO of Federal Bank, remarked that the RBI’s decision aligns with consensus. “The balance between growth and inflation is well poised, and we may see the first action on the repo rate in the December MPC meeting,” he noted.
Positive Outlook for Real Estate
Manik Malik, CFO of BPTP, highlighted the benefits for the real estate sector. “The RBI’s decision to keep the repo rate unchanged is positive for us. Stable interest rates help developers manage financing costs and plan projects more confidently. For homebuyers, this means home loans remain affordable, which keeps demand strong in the housing market.”
Future Rate Cut Expectations
While the immediate expectation of a rate cut was not prevalent, there remains hope for future adjustments. The logistics firm CFO commented, “I think the RBI will cut rates in Q4 FY25, and we are preparing accordingly.”
Nuthalapati reinforced this idea, stating, “India Inc. is ready for the current situation, but we are optimistic about a reduction in the upcoming December meeting.”
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