Honchos from real estate, consumption sectors disappointed; industry now eyes Union Budget for positive cues
The Reserve Bank of India’s (RBI) move to keep rates steady came as a shocker to industry captains, who were considering a minimum 25 basis point cut as given, and left them hunting for any positive signals in the monetary policy.
“For home seekers, a rate cut would have resulted in lower EMIs, in turn, it would have lifted sentiments, and created positivity in residential real estate,” said Niranjan Hiranandani, founder and MD, Hiranandani Group.
Demonetisation has already impacted realty sector, particularly the demand for luxury apartments, said Sidharth Pansari, director of Primarc group.
With no help coming from policy statement, Pansari is looking eagerly at the forthcoming Union Budget.
“Government can’t ignore the realty sector whose revival would be the surest way to kick-start the economy. We expect some steps in the Budget,” Pansari said.
A rate cut could also have revived consumer demand in other sectors as well, believes Harshavardhan Neotia, president, Ficci and head of realty group Ambuja Neotia group.
“At this juncture, a 50 basis point cut in the repo rate would have provided the needed boost to the flagging industrial economy. The consumption demand has been impacted post demonetization and a rate cut would have given a strong signal to the consumers and to the industry as well,” said Neotia.
Slowdown in realty is having its cascading effects on sectors like cement.
“Our extensive dealers’ check across 60 cities reveals that cement demand significantly contracted during November, down by up to 20-70% month on month post demonetization.
Amid large demand shock, prices corrected across India – with prices in the northern and western regions declining 2.5-4% month on month,”
Overall, dealers do not expect a major recovery in cement demand or in prices in December,” Rajesh Kumar Ravi, analyst with Centrum Research, said in a report.
Also, commercial vehicle segment would continue to suffer heavily.
“The CRR rollback restores locked liquidity, which is a positive,” said Anand Natarajan, head of strategy and business execution, Fullerton India Credit Company Limited.
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