Chinoy, Varma, Ghosh, and Chakraborty expect a 25 basis point cut in the repo rate at the MPC meeting scheduled for February 5-7, while Sen anticipates that the MPC will maintain the current rate.
Regarding the cash reserve ratio (CRR), all experts agree that the MPC is unlikely to make any adjustments.
Recent budgetary changes have provided relief to the middle class but have simultaneously reduced allocations for crucial sectors such as education, health, and social services. These cuts primarily impact the lower-income population, which constitutes the majority.
According to Sen, the broader concern is whether these individuals will need to reallocate their consumption patterns due to reduced social spending, potentially leading to an overall negative economic outcome.
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Chinoy believes that global growth may slow while the US remains resilient due to fiscal policies and deregulation. This poses challenges for emerging markets, which face weaker exports and limited policy responses due to a strong US dollar and high US interest rates.
India’s inflation is stabilising at 4–4.5%, driven by food services and non-tradable goods, said Varma. While currency depreciation usually raises inflation, weak demand limits its impact. Falling prices of vegetables, pulses, and edible oils are easing inflationary pressure.
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Despite uncertainty in the Rabi crop, headline inflation, which was 5.2% in December, is expected to drop below 4.5% and stay within this range over the next year, she said.
Ghosh sees rupee movements influenced not just by the US dollar but also by India’s economic growth. While global factors matter, domestic activity plays a key role. Growth projections for 2025–26 remain stable, emphasising the need to focus on long-term economic trends rather than short-term currency fluctuations.
For the full interview, watch the accompanying video
