RBI repo rate hike: Indian realty developers unhappy with Raghuram Rajan, say will impact housing

Sep 20 2013, 18:58 IST
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'There was no need to increase the repo rate at this juncture.' (AP) 'There was no need to increase the repo rate at this juncture.' (AP)
Summary'There was no need to increase the repo rate at this juncture.'

burden of high Equated Monthly Installments (EMIs).

"It would also dampen sentiments ahead of the peak festival season, when developers expect the demand for houses to go up. This is going to hurt both buyers as well as the developers," Kumar said.

Reacting to the RBI policy, real estate developers' apex body CREDAI's Chairman Lalit Kumar Jain said: "It is equally important for the RBI to promote economic growth by encouraging real estate and infrastructure development even as the new Governor has inflation on his mind."

RBI's move to raise repo rate would negatively impact sentiments, ultimately affecting sales, he added.

Realtors' body NAREDCO President Navin Raheja said: "All industries including real estate are struggling and facing huge liquidity crunch, high input costs and slow sales. Hike in repo rates will again lead to increase in borrowing cost and will result into further increase in input cost."

Tata Housing MD & CEO Brotin Banerjee said that banks can be expected to increase interest rates which will impact consumer sentiment in the real estate industry.

"If not through the monetary policy, the industry needs to be provided immediate relief through other fiscal measures. The government needs to have policies to drive real estate growth as this is the second largest contributor to our GDP," Banerjee demanded.

Assotech MD Sanjeev Srivastva said: "Looking at current situation of our economy, we were not hoping any rate cut in repo rate, but increasing repo rate is a bit surprising."

Expressing similar views, Ramprastha Group CEO Nikhil Jain said that the company expected a significant change in policy that would encourage borrowers and investors to lend money. The hike in repo rate would escalate project cost.

KDP Infrastructures Executive Director Anuj Goel said that the move is aimed at reducing inflation. "We need to closely watch how fast this could bring down inflation and ensure industry growth."

Home loans would be costlier after this move, having a direct bearing on the aspiring buyers as lot many people will refrain from buying homes, said Pankaj Jain, Director of Noida-based realty firm K World Group.

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