Banking system is struggling with cash crisis, why credit growth is sluggish speed!

GDP Growth Rate: The Monetary Policy Committee of the Reserve Bank of India has decided to cut the repo rate to make the debt cheaper in the first week of February. But economists consider it inadequate. Axis Bank Chief Economist Neelkanth Mishra said that if the Reserve Bank of India (RBI) wants to speed up economic growth, then he should focus on making cash easier instead of cutting policy rates.

Mishra, who is also responsible for a part -time member of the Prime Minister’s Economic Advisory Council, said that the policy rate has been cut earlier this month. Even if the deduction is done in the future, it will not increase the debt, it is due to lack of cash, which will obstruct the loan. Mishra said, “Like the Monetary Policy Committee has said that if the objective is to make financial conditions easier and support economic growth, then I would suggest that cash should be noted first because at this stage, rates cut Help is not available. “He said,” If the objective is to use monetary means to support the increase, then cash should be the first solution. “

Neelkanth Mishra said that if the rate of rate cut is aimed at promoting debt, new debt will not be found at low rates as the marginal cost of the fund remains high due to tight conditions of cash going on for the last 18 months. He said that despite a reduction of 0.25 percent in the repo rate of RBI, the interest rate on one year deposit certificate remains at a high level of 7.8 percent.

Mishra admitted that analysts expected a total reduction of 0.75 percent in the policy rate at three times. But he reiterated that the cash will be more effective. He also said that RBI new Governor Sanjay Malhotra has said to provide necessary cash to the market. In response to a question, Mishra supported the purchase and sale of securities in the RBI regularly open market to provide cash on sustainable basis. He said that instead of further deduction in cash reserved ratio (CRR), the need to keep cash in addition to the incremental CRR i.e. cash reserved ratio would be more effective.

He also said that if the cash situation becomes rapid and the government maintains its fiscal commitments, then they are up to seven percent levels of gross domestic product (GDP) in the second quarter of FY 2025-26 up to seven percent level Hope to reach. Mishra also said that in the last few years the global market has become less relevant for India. Although global events are unfavorable, the economy may become stronger between them.