It is most welcome, though cautious: Rajeev Talwar

The announcement is most welcome, though it is cautious. It is not surprising, given the contraction in development and manufacturing growth.

Various factors, including reforms such as opening of multi-brand retailing, have given confidence to the Reserve Bank of India governor to cut interest rates. The rate cut will release Rs 18,000 crore into the system. Now, banks should take a cue and lend more, which will give relief to buyers and boost demand in the system.

However, it is a signal to the government that it needs to act on the current account deficit and fiscal deficit and reign in any chance of increase in food inflation, with adequate stock of foodgrain.

Going through the calendar year, in the months of June and July, the efforts of the government will have to show further results for further rate cuts.

The first step has given a great confidence to India Inc that the economy will go on a higher spiral now onwards. If India can sustain this trend, it will certainly spur a springback. In all, a good way to begin the year.

Rajeev Talwar
Group ED, DLF