Editorial

How Much Will The Common People Benefit From The Increase In Repo Rate?

There is no doubt that inflation control is necessary and the Reserve Bank of India has made changes in monetary policy accordingly. 

It is also special that before the announcement of monetary policy, Reserve Bank Governor Shaktikanta Das cited rising inflation at the global level. 

Neither the Governor’s concern about inflation is new nor the measures taken by him. 

He has announced to increase the repo rate by 0.50 percent, that is, the repo rate in India has now increased from 4.90 to 5.40 percent. 

The direct effect of increasing the repo rate will be that there will be a lack of liquidity in the market, there will be an effect on buying and selling. 

If demand is low and supply is high, prices will fall. This is an age-old measure to reduce the liquidity of money in the market. 

To accelerate the market, the repo rate is reduced and to reduce the momentum, the repo rate is increased.

However, it was a possibility for a few days. The government does not have any specific measures, because its focus is more on revenue, so that the fiscal deficit does not increase much. 

Recently, by imposing or increasing GST on daily necessities, it has taken measures to increase its earnings, so the responsibility of reducing inflation has fallen on the Reserve Bank of India. 

Well overall there is happiness in the market. Even before the announcement of monetary review policy on Friday, the stock market opened with strength. 

BSE’s 30-share key sensitive index Sensex opened with a gain of 122 points. More or less the same situation remained in Nifty also. 

In fact, most companies are seeing their profit in rising inflation. Despite the increase in the repo rate, one of the reasons for the rise in the stock market is that the markets are confident. 

Indian economy is battling high inflation and it is necessary to bring it under control. But will the Reserve Bank succeed in this? 

Are common people getting the benefit of loan waiver and relief to big companies? There are also complaints about weak collection of revenue from many big companies, both domestic and foreign. 

In such a situation, there is also a question that how much will the common people benefit from the increase in the repo rate? 

Will there be a need to increase the repo rate further?

 At present, the Reserve Bank of India has retained the inflation forecast for the financial year 2022-23 at 6.7 per cent. 

Whatever the figures say, but the prick of inflation at the ground level is too much maintained at 7 percent. 


There is a two-pronged problem for the common man, because the increase in the repo rate is bound to make the loan costlier. 

Home loan, auto loan, personal loan installments will increase further. Understand in the figures, if your installment is Rs 24,168, then it will increase to Rs 25,093. 

The governor has admitted that the country’s economy is battling high inflation, but the global situation prevailing now, no one can give concrete estimates of relief. 

There are many countries, where the inflation rate is much higher than India, but in the rich countries, the government is standing behind the common man, whereas in other countries it is not possible. 

Despite the challenges, the country’s growth rate remains at 7.2. 

By the way, India will have to save its currency reserves also. 

Opening more treasury has its dangers, but it can be arranged that whenever and as much as it opens, the benefits must reach to the common people.

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