Contrary to demands for rate cuts raised vociferously in certain quarters, an overwhelming majority of corporates and financial institutions do not expect any changes in the repo and CRR in the next week’s policy announcement, a survey has found.
“An overwhelming 75 percent expect no change in the repo and reverse repo rates in this policy meeting, with the remaining 25 percent expecting a cut of 25 to 50 bps,” a client survey, involving 113 corporates and financial institutions by Royal Bank of Scotland (RBS), said.
Similarly, 83 percent of the respondents said there will be no cut in the cash reserve ratio (CRR), or the amount of deposits banks have to park with the RBI, it added.
The corporates are of the view that high inflation and no initiatives from the Government leave little room for the apex bank to act proactively.
RBS surveyed 113 clients, 54 percent of them from the corporates and the rest from other financial institutions like banks, insurance companies and mutual funds. Reserve Bank Governor Duvuuri Subbarao will unveil the first quarter monetary policy on 31 July.
Government and the credit-starved industry are clamouring for some growth-enabling actions from the Mint Road in view of decelerating growth numbers and tepidly softening inflation.
While GDP growth hit a nine-year low last fiscal at 6.5 percent, inflation remains elevated at 7.25 percent for June.
Despite all the poor GDP numbers, the RBI left the policy rates and CRR unchanged at the last meeting on 16 June. On the rupee-dollar front, the survey offers some relief—the survey says the median expectation of the rupee is at Rs 54 to the dollar by the end of December, which will further stabilise to Rs 53 by the fiscal end in March.