Blitz Bureau
In a landmark monetary policy shift aimed at accelerating economic momentum and aligning with Prime Minister Narendra Modi’s vision of a “Viksit Bharat” by 2047, the Reserve Bank of India (RBI) has announced its most assertive easing in five years. The central bank has reduced the repo rate by 50 basis points to 5.5 per cent and cut the Cash Reserve Ratio (CRR) by 100 basis points, infusing Rs 2.5 lakh crore of liquidity into the banking system.
RBI slashes repo rates to fuel growth, empower citizens & MSMEs
This dual-action move — unseen since the pandemic-era cuts of 2020 — signals a strategic shift from a singular focus on inflation control to a broader agenda of growth revival. With inflation now comfortably within the RBI’s tolerance band and GDP growth slowing to 6.5 per cent in FY2024-25, the Monetary Policy Committee (MPC) has adopted a “neutral” stance, stepping away from its long-held “accommodative” position.
Relief for households
For everyday consumers, the move translates into lower EMIs on home, auto, and personal loans, providing timely relief amid persistent cost-of-living pressure. Commercial banks are expected to begin transmitting the rate cut benefits to borrowers in the coming weeks.
However, while lending becomes cheaper, depositors may face marginally lower returns, with several banks already adjusting fixed deposit and savings rates downward by 10 to 35 basis points. This has prompted many savers to reassess their investment strategies.
Impetus for MSMEs
India’s micro, small, and medium enterprises (MSMEs)—a critical pillar of the economy contributing nearly 30 per cent to GDP and employing over 110 million people — are poised to benefit substantially. Lower borrowing costs and improved liquidity will enable MSMEs to access affordable credit, expand operations, and contribute more meaningfully to the supply chain and job creation.
The CRR cut, in particular, frees up additional funds that banks can deploy toward priority sector lending, including small businesses. RBI’s parallel engagement with NBFCs is also expected to ease financing constraints across underserved segments.
These steps strongly support the Government’s Make in India initiative by enhancing the competitiveness of domestic manufacturing and export sectors. Reduced financial strain will allow exporters to manage pricing more efficiently and strengthen India’s position in global markets.
Move toward Viksit Bharat
The RBI’s measures are closely aligned with the broader economic roadmap of the Government, aimed at inclusive development and long-term economic resilience. By stimulating demand, increasing access to credit, and sustaining employment, the decision contributes directly to the pillars of the “Viksit Bharat @2047” mission.
Governor Sanjay Malhotra described the policy as a “frontloaded push for growth” amid evolving global uncertainties. The neutral stance offers the central bank greater flexibility to respond to future data, whether through further easing or a pause.
This bold monetary intervention marks a pivotal moment in India’s post-pandemic economic strategy. More than just a macroeconomic adjustment, it is a carefully calibrated effort to empower citizens, revitalize industries, and steer the economy toward sustainable, inclusive growth. The success of this move will depend on the pace and efficiency of policy transmission through the banking system — but the signal is clear: India is choosing growth with clarity and commitment.