Repo rates

The Reserve Bank of India has increased the repo rate to 7.5% now, a move that most financial analysts say they have been expecting. This is now the highest repo rate for the past 4 years. The reverse repo however is still at 6%. A move that is meant to curb inflation that seems to be increasing exponentially, I am glad they have finally started to try and curb the credit growth.
The most hit by inflation this year have been the poor and middle-class, the prices of foodstuff – raw and processed has an increase of almost 30% now which means that basic needs of people have begun to get affected.
GDP growth rate expected is around 9 – 9.5% and if inflation is not controlled, this is going to be tough to achieve.
On another front, import duties are being reduced to tackle price rise here. Hopefully, we should see some sense coming in.
S & P has finally finally finally (finally repeated nth times, you get the idea) increased the rating of India to investment grade (BBB/A-3) which has been long due.
The things deterring S & P have been fiscal deficit (which is one of the highest in the world, we must conceed that) and regulations.
However, with India becoming a more open market, capital markets booming, its the in thing now to invest here. Fingers crossed for a great year for the capital markets and a slight dip in real estate prices so that I can afford that flat I want to buy soon.


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