Since February last year, the RBI has cut the repo rate by 125 basis points.
Also Read: India-US trade deal details to determine the impact on Rupee, says RBI chief Malhotra
Speaking at a post-policy press conference, Malhotra said, “The policy rates will continue to be at low levels for a long period of time (and) they will go down even further.” He clarified, however, that decisions on rates will be taken by the Monetary Policy Committee (MPC).
On policy transmission, he added that deposit rates have been slower to adjust. “Interest rate on fixed deposits will be going down,” he noted.
Addressing the impact of India’s recent trade deals, Malhotra said these agreements, along with other factors, could contribute around 20 basis points to the country’s GDP growth. The RBI had earlier revised its GDP forecast upward for the first and second quarters of the next fiscal year.
Deputy Governor T. Rabi Sankar commented that the RBI is well-positioned to manage the government’s borrowing programme comfortably. The government’s gross borrowing for the next fiscal is pegged at Rs 17.2 lakh crore, with net borrowing at Rs 11.73 lakh crore.Malhotra added that T-bills will help manage the yield curve and the government will be able to raise its net borrowing at reasonable rates. On the Budget’s incentives for data centres, he said, “It will bring in a lot of foreign investments.”
Responding to a question on currency in circulation, the governor noted that it has increased significantly over the last one year.