In regards to rate cut announced this week, P Balendran, Vice President, General Motors India says the minor reduction is not sufficient to stimulate consumer demand for loans and improve near term market conditions. The 25 basis points reduction that came into effect earlier in 2015 did not lead to any pickup in economic activity as interest rates charged by banks were not lowered.
For any visible impact, rate cut should be at least 100 basis points to encourage consumer spending. Union Budget 2015 did not offer positive takeaways for automobile sector. Coming months will be viewed with cautious optimism. Sustained growth seems a long way from now. He does view it as a positive move and hopes rate reduction continues in phases to boost economy turnaround.
V S Parthasarathy, Chief Financial Officer, Group CIO, EVP – Group M&A, and member of the Group Executive Board, Mahindra and Mahindra Ltd says rate cut brings cheer. RBÍ’s pleasantly surprising cut brings much needed cheer to outlook for growth and consumption. The move is investment and credit positive. Disinflation setting in at a faster pace than expected is likely to have added to urgency for providing a rate cut stimulus to economic activity. RBI’s current move is complementary to fostering activity at ground level both in rural economy and kick-starting investment in projects. No doubt, there will be lag for rate cut to positively impact growth and demand. However, growth directed measures do anchor positive sentiments firmly.
Union Budget 2015 announcement last weekend didn’t spell out any immediate benefits for Indian auto industry in reference to excise duty payable.