Dr. Raghupati Singhania, Chairman & Managing Director, JK Tyre & Industries Ltd., lauded RBI’s move of cutting both repo rate and reverse repo rate by 40 bps to 4.00% and 40 bps to 3.35% respectively.
In a press statement, he said: “It is a welcome step and should encourage the Indian banking system to lend liberally at this time of Corona Pandemic crisis which has engulfed the manufacturing sector in particular. The rate cut combined with the further extension of loan moratoriums by three months is a very positive step for the industry.”
While these are welcome measures by the RBI, it is now crucial that rate cut gets transmitted by way of lower rate of interest to the corporates and lending by the banking system goes up substantially to somewhat mitigate the immediate concerns related to liquidity.
He added: “It is, however, critical to take effective steps to generate demand through industry specific measures. For example, in the Auto Sector which was already reeling under low demand crisis even before Covid-19, needs considerable boost by following measures:
1. Reduction of GST Rates for a period of 3 years which may be reinstated after this period. The notional revenue loss will be more than compensated by the additional demand generated.
2. The long pending scrappage policy of old vehicles for 15 years or so, more particularly in the commercial vehicle segment should be introduced forthwith.
3. Special efforts should be made to ensure that adequate financing is made available to potential customers for automobiles both CV’s and Passengers, through NBFC route.
Such measures can help revive demand and put the economy on track, he opined.