Bangalore: The ‘repo rate’ plays a very important role in any nation’s economy. As described by Business Dictionary, it is the discount rate at which a central bank purchases government securities from the commercial banks. At times, the central banks also decrease this rate to expand the money supply for a temporary period. Simulataneously, the central bank increases this rate to contract the money supply.

The Reserve Bank of India (RBI) had recently cut down the repo rate by 25 bps. This cutting down had a huge impact on the Indian financial sector. Here are some of the financial expert’s views on the cutting down of the repo rate as reported by the Economic Times.

1. Montek Singh Ahluwalia

Deputy Chairman, Planning Commission

Montek Singh Ahluwalia, who has also been the Director of the Independent Evaluation at IMF, says that the RBI is gloomier than the government.

He also thinks that all the predictions of the government seems to be practicable now and the main concern of the government should be vested in bringing back the strength of investment.

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