The Central bank announced several measures to ease financing for the Indian industry. It has agreed to provide an enabling framework for Indian banks to finance acquisitions by Indian corporates, which has been a long-pending demand of Indian banks and is expected to reduce the cost of acquisitions
The Reserve Bank of India (RBI) has left the repo and reverse repo rates unchanged as it awaits greater clarity on the impact of US penal tariffs on Indian products. However, the Central bank signalled its readiness to support the economy if the US tariffs significantly hit the Indian industry.
The Central bank revised its economic growth estimates upwards for the current fiscal year to 6.8 per cent from the previous estimate of 6.5 per cent in August and lowered its inflation projection to 2.6 per cent based on an above-normal monsoon and the rationalisation of GST rates. However, RBI governor Sanjay Malhotra admitted that the impact of US tariffs could be greater than the relief that GST rationalisation could provide.
The Central bank announced several measures to ease financing for the Indian industry. It has agreed to provide an enabling framework for Indian banks to finance acquisitions by Indian corporates, which has been a long-pending demand of Indian banks and is expected to reduce the cost of acquisitions.
It also raised the upper limit for banks to lend against shares to Rs 1 crore and for IPO financing to Rs 25 lakh per person, increasing the availability of credit to investors and potentially supporting Indian equity markets in troubled times.
In one of the most important decisions taken on October 1, the RBI has taken baby steps to internationalise the rupee to reduce the use of the US dollar. Towards this goal, the Central bank has allowed Indian banks to lend to those from Bhutan, Nepal and Sri Lanka for the purchase of Indian goods.
The US tariffs affect nearly $44 billion of Indian exports, which is one per cent of the Indian economy. If the GDP is raised beyond eight per cent through various fiscal and monetary measures, India can escape unhurt from Trump’s trade war against India.
