The Reserve Bank of India on Friday cut its key repo rate by a larger-than-expected 50 basis points and slashed banks' cash reserve ratio (CRR) by 100 bps, taking advantage of cooling inflation as U.S. President Donald Trump's tariff threats add to global uncertainty.
Everything just seems to be revolving around Trump. I doubt it. Actually Reuters also doubt it. And here's the truth...
The RBI's pivot comes at a crucial moment. A strong monsoon is expected to lift rural incomes and sentiment, but urban consumption and private investment remain tepid.
If that's not enough here's more....
The policy shift is in line with the government's broader push to support micro, small and medium enterprises (MSMEs), critical to create jobs in the world's most populous country.
To back the whole truth, here's some data..
The MSME sector contributes 29% to India's GDP, 40% of exports and employs over 60% of the country's workforce. In contrast, just 16% of overall bank credit goes towards this sector as of April, RBI data showed.
The media itself knows that India's economic decisions have nothing so much to do with Trump but may be it gives them some more authenticity. Anyways.....