THE HIGH POSSIBILITY OF INTEREST RATE CUT BY RBI IN THE FEB-2025 MPC MEET : WILL WORK IN NATIONAL INTEREST

THE HIGH POSSIBILITY OF INTEREST RATE CUT BY RBI IN THE FEB-2025 MPC MEET : 

WILL WORK IN NATIONAL INTEREST


Dear Readers,

The Possibility of the Interest Rate Cut by RBI (Reserve Bank of India, the India's Central Bank) in the forthcoming MPC Meet of February-2025 to be held this week is very high, that will go and work in the National Interest that is most deserved.

Particularly when in the National Budget presented in the Indian Parliament on 01-Feb-2025 by Hon'ble Finance Minister of India on behalf of Government of India has announced many financial support for the weaker sections of the Society with Liberal Loans for boosting of Economic Activities, at this point of time sticking to a High Interest Regime in parallel as has been done with a Repo Rate of 6.5% since February 2023 by RBI, will be counter productive.

If you look at the Present situation which RBI is sticking to unduly since February 2023 after having climbed to to the highest level 6.5% Repo Rate, when the Banks have to add about 2.75% to 3% minimum margin over it to arrive at their retail lending rates (a large Public Sector Bank which is a merged entity of 3-Banks in recent years, not naming in fairness, but adds 2.75% minimum shown in public domain) it becomes minimum of 9.25% or 9.5% minimum lending rate for retail loans, and it can be anything more and beyond it. The Common Retail borrowers are struggling with unbearable EMIs for a long time, it can not be denied. The Commerce and Industry in the Country have to face same problem due to the sticky RBI Stand on Interest Rate going on since February 2023.

In fact, while the Government of India has clearly expressed in favour of Interest Rate Cut to be done by RBI in the past months, when both Hon'ble Finance Minister of India-Ms. Nirmala Sitharaman and Hon'ble Union Minister of India for Commerce and Industry, Food and Civil Supplies - Mr. Piyush Goyal, both very Senior Ministers of the Central Cabinet, had said in public some time in in last months of the past, that Interest Rate Cut must happen and should be done by RBI from its Repo Rate of 6.5%, while on the other hand continuously 2-External Nominated Membersof MPC out of the 3-External Members from the total 6-Membered MPC (whether Old-just out gone or Newly Formed MPC ) had dissented asking for Interest Rate Cut in the Repo Rate of 6.5%, it is the dogmatic attitude of Former RBI Governor-Mr. Shaktikant Dash and Former Dy. Governor -Dr. Michael D. Patra which had practically plagued the subject matter for a very long time, as they were badly stuck with their idea to hold the highest level of interest rate of RBI dragging the whole MPC towards it. 

The New MPC Committee have now been re-christened at the Instance of Govt. of India as follows:

1.   New RBI Governor - Shri Sanjay Malhotra ..brought in on 11-Dec-2024 ( by allowing the Former RBI Governor-Mr. Shaktitant Das to retire justifiably without giving further extension on 10-December-2024 as he deserved to go..).

2.  Dy.Governor -Sri M. Rajeshwar Rao, in Charge of Monetary Policy ( even if he is in interim-charge as reported in media, brought in on 15-January-2025 by allowing Former Dy. Governor -Mr. Michael D. Patra to retire justifiably without giving further extension as he deserved to go... he was the most stumbling block to be said to continue sticking to High Interest/Highest Interest Rate Regime...in fact, was the pivot to drive the 3-internal members of RBI MPC in the direction of Highest Interest Rate.... that was the recognized drawback/inefficiency in the National Interest as reported in public domain, which is not being able to understand the Dire National Need being in charge of Monetary Policy Portfolio of RBI and de facto that of the Nation).

3.  Executive Director of RBI - Dr. Rajiv Ranjan - he continues as an MPC Member as being the designated ED(Executive Director in charge of Monetary Policy Dept.) there as before, however being the junior most in the 3-Internal MPC Members of RBI, he could do nothing other than toeing the line of the Former RBI Governor and Former Dy. Governor mentioned above as his bigger senior duo.

4.  Dr. Ram Singh --External Nominated MPC Member -Director of Delhi School of Economics, Delhi.  Newly Nominated in recent months. .. he has been in favour of Interest Rate cut in last bimonthly MPC Meet in December 2024.

5.  Dr. Nagesh Kumar - -External Nominated MPC Member - Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi ...  Newly Nominated in recent months. .. he has been in favour of Interest Rate cut in last 2-bimonthly MPC Meets in October 2024 and December 2024.

6. Mr. Saugata Bhattacharya --External Nominated MPC Member - Economist ...  Newly Nominated in recent months... In fact Mr. Saugata Bhattacharya was very vocal in the past in favour of Interest Rate Cut of RBI, however as soon as he was nominated to the MPC...surprisingly he had changed his stand toeing the line of RBI Internal Team in MPC to hold the Highest Interest Rate,  which has been observed by everyone in the Nation. Hopefully he will come back now to his original stand that he used to take before getting into MPC. 

While the MPC Membership has been totally re-christened in recent months at the instance of Government of India in the National Interest (not only the appointments of RBI Governor and Dy. Governor are done by Govt of India, the External MPC Members are also nominated by Government of India) it is hoped with high possibility that there will be Interest Rate Cut in RBI in the MPC Meet of February 2025 to be held this week.

This High Possibility Postulation is also based on the Fact that in the National Budget announced on 01-Feb-2025 by the Hon'ble Finance Minister of India on behalf of Govt of India just 2days back, has Massive Thrust and Push to give Financial Support to the Weaker Sections in India by providing Retail Loans to them to boost economic activities. And also, the Commerce and Industry also needs support for GDP Growth Rate to get a Boost, that Govt of India is looking forward to.

I have found out a publication of The Economic Times that has also given a report in consistency to what I am saying in my note, giving the link below, who find interest can read it.


I have written this note also in the National Interest and I hope that the New MPC Dispensation at RBI will take action with due care in the National Interest and the Need of the Nation at this hour, which has been pushed back by the Former RBI Team that existed with their Orthodox and Dogmatic Attitude until December 10, 2024 or even up to January 15, 2025 literally as explained above.

With Best regards,
Dr. Nimain Charan Biswal,
Mumbai, India


About the Author : Dr. Nimain Charan Biswal is a B.Sc.(Agri. Science and Technology), M.B.A. and Ph.D.(Management Area ) by qualifications; and he has 38+ years of work experience in Social, both industrial and Development sectors in diversified fields of Social Importance. He has been educated at Orissa University of Agriculture and Technology (OUAT)-Bhubaneswar, Institute of Rural Management Anand (IRMA) and Gujarat University (with Resource Support of IIM-Ahmedabad). He is further educated at IIM-Calcutta, XLRI-Jamshedpur, Apple Computer Industries and Spar Inc., USA. He has worked for reputed National and International Organizations in Senior/Top Management Capacities at Board level as well as Managing Director and CEO. He is a management expert covering extensive areas from management in Social, industrial sectors, management in Agriculture and Dairy, Development Management to management of public systems. He is a prominent professional of India and known Internationally as well. He is also a Political Strategist. He lives at Mumbai in India.

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