Facing unexpected credit growth stagnation at 10% despite post-pandemic recovery, the RBI executed a sharp 100 basis points policy rate reduction in early 2025, shifting to an accommodative stance amid cooling food inflation and stable crude prices to revive personal loans, small business lending, and consumer spending momentum. This monetary pivot aligns with fiscal efforts like direct tax relief for middle-income groups, enhancing disposable incomes and supporting tier-2/3 city growth, while supply-side reforms in labor codes and digital compliance platforms position India for sustained 6.6-6.9% expansion into FY27.
RBI’s Aggressive Rate Cuts and Liquidity Boost Counter Credit Slowdown Challenges
