INSUBCONTINENT EXCLUSIVE:
December for a sixth time this year, and again before July, according to economists in a Reuters poll who forecast those reductions would
either marginally boost the economy or have no impact.Currently the most aggressive major central bank in the world, the RBI has cut rates
by 135 basis points this year to 5.15 per cent, but inflation has remained low by historical standards and policymakers have barely moved
the needle on growth.The economy expanded 5.0 per cent in the April-June quarter on a year earlier, its slowest annual pace since 2013, and
was expected to grow 4.7 per cent last quarter, according to the latest Reuters poll, taken November 20-25.That was significantly lower than
the 5.6 per cent rate predicted in the last poll, and would mark six consecutive quarters of slowing growth, a first since 2012
It also comes despite a recent series of fiscal stimulus from Prime Minister Narendra Modi's government, which was re-elected in a
landslide in May."Further rate cuts are likely to have a limited impact on the economy as cost of borrowing is not the pressing issue
The lack of risk appetite and fragile sentiment are holding back fresh investment in the economy," said Sakshi Gupta, senior India economist
at HDFC Bank."While further interest rate cuts would support growth at the margin, we need to see a turnaround in sentiment to restart the
investment cycle."Recent business surveys have suggested the economy would not improve in the near-term.A significant minority of economists
- 24 of 56 - who answered an additional question in the poll said rate cuts would marginally boost the economy, while nearly a third said
they would have little or no impact.The remaining 15 economists said rate cuts would prevent growth from slowing further and none said they
would significantly boost the economy.The latest Reuters poll predicted the RBI would cut its repo rate for the sixth time in a row by 25
basis points to 4.90 per cent at its December 3-5 meeting, according to median forecasts from more than 70 economists
That would mark the longest streak of consecutive rate cuts since the current interest rate framework was introduced nearly 20 years ago."We
don't expect any miracles from lower borrowing rates," said Hugo Erken, head of international economics at Rabobank."In order to push
India's growth trajectory back on track, the government should step up its efforts by forging a reform package which tackles labour market
rigidity, housing market woes, et cetera."If the poll is correct, 160 basis points of cumulative rate cuts this year would be the most in a
calendar year since 2009.The RBI is then expected to chop another 15 basis points in the second quarter of 2020, taking the repo rate to
4.75 per cent, where it will stay at least until 2021, according to the poll.Those expectations of further rate cuts come despite inflation
breaching the RBI's medium-term target of 4 per cent for the first time in 15 months in October.Still, a significant majority of
respondents to the poll, 35 of 56, said the ongoing economic slowdown would last for at least another six months.Get Breaking news, live
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