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RBI repo rate cuts alone can't shift India's economic growth gear

Clearly, it is not for the RBI and its monetary policy committee (MPC) to fix any of these deep structural issues and magically create growth

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A mere 100-bp cut will do little to spur demand. The RBI’s expected growth in gross domestic product (GDP) is projected to be the same 6.5 per cent as last year, and consumer price inflation slightly lower. This means overall growth expectations are modest. The reason: The four main economic drivers of the economy are stuck in low gear.

Debashis Basu

5 min read Last Updated : Jun 15 2025 | 9:31 PM IST

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On June 6, the Reserve Bank of India (RBI) surprised the markets — it sliced the repo rate by 50 basis points (bps) to 5.5 per cent and cut the cash reserve ratio (CRR) by 100 bps, phased over four 25-bp tranches from September to November. The move, expected to inject ₹2.5 trillion ($30 billion) into the system, briefly lifted spirits: The Nifty index climbed 1 per cent that day, with a modest gain the day after.

However, by the end of the week, the index had slumped below its pre-cut level. The rate cut is a sideshow. With the

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Topics : MPC RBI MPC Meeting monetary policy committee RBI RBI repo rate BS Opinion