The decision of the Reserve Bank of India (RBI) to keep  has disappointed the real estate fraternity that has already been reeling under a slowdown.

RBI Governor Raghuram Rajan has key policy rates on hold in his second bi-monthly monetary policy review, the first under the Modi regime.

According to Shrikant Paranjape, Chairman, Paranjape Developers, both home buyers and developers are disappointed with the RBI leaving the interest rates untouched. Paranjape said that this would have a negative impact on the already suffering real estate sector.

“We had expected the new government to bring hope to the real estate sector and the industry was looking forward to some relief in the form of interest rates being brought down. Business is already slow and I do not see a recovery soon.” said Paranjape.

Hemant Naiknavare, Vice President, Credai Pune Metro and Director, Naiknavare Developers, said that it would be favourable for the government to bring down the home interest loans to a single digit from the existing 10 to 11 per cent. He said that prospective home buyers are finding property rates and home loan rates quite high to make property purchases. “Housing is the biggest barometer of a country’s economy. There is a need to bring down the home loan rates to almost five per cent to fulfil the aspirations of home buyers,” Paranjape said.

Sanjay Dutt, Executive Managing Director, South Asia, of real estate consulting firm Cushman & Wakefield, said that the RBI’s stance to keep key rates unchanged was expected. “The RBI has stuck to its stance that there will be no rate cuts unless inflation is tamed. However, we anticipate that this is the end of a liquidity tightening cycle. We expect that the annual budget and monsoon will be key factors on the basis of which RBI will begin easing the interest rates.” Dutt said.

Reserve Bank of India (RBI) left key interest rates intact as previous in its 3^rd bi-monthly monetary policy review, so the EMIs (equated monthly installments) for automobile, home and other loans would remain unchanged. Several sectors such as; real estate, automobiles and other have been struggling to keep up sales or profit due to high interest rates and raw material costs, which has diminish the sentiments of Indian consumer.

In policy statement RBI governor Raghuram Rajan said that RBI will monitor inflation developments, as they are committed to bring the Consumer Price Index (CPI) inflation to 8 % by January 2015 and 6 % by January 2016. It seems critical to sustain the disinflationary process over the medium-term as the inflation is around 8 % in early 2015.

The repo rate, or the rate of interest that any bank pay when they borrow money from Reserve Bank of India to meet their short-term fund need, has been left as previous at 8 %.

The reverse repo rate, or the rate of interest that RBI pays to other commercial banks when they require their surplus amount to meet short-term fund requirement with the central bank, has been adjusted to 7 %.

The Cash Reserve Ratio (CRR) is as before at 4%. The Bank Rate and marginal standing facility rate is also kept unchanged at 9 %.

The Statutory Liquidity Ratio (SLR), or the obligatory amount of bonds lenders must keep with the RBI, was cut by 0.5 % to 22.0 % as their net demand and time liabilities (NDTL) and the same will implemented by August 9, 2014.

Rana Kapoor, president of Assocham (Associated Chambers of Commerce and Industry of India) said that “RBI has once again taken an over-cautious approach and easing of the same could have taken the GDP growth in the near about of six per cent in the current fiscal itself”, where as Chandrajit Banerjee, director general of CII (Confederation of Indian Industry) said that “At a time when industrial growth continues to be sluggish, Consumer Price Index (CPI) based inflation is moderating and, above all, inflation risks are gradually abating due to improvement in monsoon conditions, the RBI could have taken this opportunity to effect a cut in interest rates,”

Meanwhile, the share markets turned bearish after the RBI left key interest rates same as previous in monetary policy review, and India Inc. also welcomed the RBI move cut SLR for putting more funds into the system.

Sensex rises 185 points on RBI monetary policy review and touched a height of 25,831.53 points with a low of 25,562.36 points in the trade, and 50-scrip Nifty was traded on at 7,648.45 points. The Sensex gainers were: Bajaj Auto up by 1.85 percent, Sun Pharma up by 1.28 percent, Mahindra and Mahindra up by 2.10 percent, Infosys, up by 0.82 percent, and ONGC up by 1.17 percent while losers were: ICICI Bank down by 1.36 percent, HDFC down by 1.31 percent, ITC down by 1.45 percent, Coal India down by 1.61 percent, and Hero MotoCorp down by 1.41 percent.

The Central Government of India and State Government are taking the essential steps to control the rising food prices by easing grain imports or directly selling edible commodities both. After considering the current data and macro-economic situation of country most analysts was predicted the status quo. As per data released by Central Statistics Office (CSO), the retail inflation based on CPI declined to 7.31 % in June 2014 in comparison of 8.28 % in May 2014.