New Delhi
If you are thinking of taking a new loan or repaying the loan in advance, then there is good news for you. The Reserve Bank of India (RBI) can reduce the repo rate from 50 to 75 basis points (BPS) in the coming financial year 2025-26. This is estimated in the latest Crisil report. Its purpose is to give relief to the common people, increase consumption and strengthen the country’s economy.
What will be the benefit of cut in repo rate and interest rate?
The repo rate is the rate on which RBI gives loans to banks. When this rate decreases, banks also give loans to people at a low interest rate. Due to this, loans like home loan, car loan and personal loans become cheaper. This increases people’s ability to spend the market, which increases the demand in the market and increases the economy.
There was a cut in February too
In February 2025, RBI first cut the repo rate by 25 basis points after five years, decreasing from 6.5% to 6.25%. Earlier, RBI had increased the repo rate by 250 basis points to prevent inflation during 2022-23, but now after keeping inflation under control, it is being planned to reduce interest rates to increase people’s spending capacity and increase investment.
Efforts to bring inflation under 4%
The RBI has been trying to bring inflation to around 4% for a long time. From April 2023, the repo rate was stable at 6.5% but now there is a plan to promote economic growth with the new cuts. According to CRISIL report, the government and RBI together will strengthen the economy by cutting interest rates in 2025-26.
Big advantages due to interest rate cut:
➤ Lone will be cheap – It will be cheaper to take loans for home, car or business.
➤ Consumption and increase in investment – People will be able to spend more, which will speed up the market.
➤ GDP will get support – Increasing money in the market will benefit the country’s GDP growth.
➤ Promotion of infrastructure and government schemes – The government has planned to increase capital expenditure for FY26 to 10.1%, which will increase investment in new projects.
➤ Financial deficit reduction – The government is trying to reduce the financial deficit from 4.8% to 4.4%, which will maintain economic stability.
Global risk and impact on Indian economy
However, Crisil’s report states that global uncertainties can become a challenge for India’s economy. Instability in the global market can affect exports and foreign investors can stay away from risky markets. However, domestic demand and government policies will maintain the economy firmly.
Expect reduction in inflation
According to the report, inflation may decline further in the next financial year. Sowing of rabi crops has increased by 1.5%, which will improve food supply. Apart from this, crude oil prices can also be reduced. Oil prices in FY26 may be $ 70-75 per barrel, which will be less than $ 78-83 per barrel of FY25. This will further control inflation. It will be very beneficial for the general public if Crisil’s report proves correct and cuts interest rates in RBI 2025-26. This will make the loans cheap. The money will increase in the market and the economy will gain momentum. However, in view of global conditions, the government and RBI will have to be vigilant so that economic stability remains.
