New Delhi, Oct 1 (NationPress) Economists and industry specialists highlighted on Wednesday that following a significant demand surge triggered by the decrease in GST rates, the RBI has chosen a prudent strategy by maintaining the repo rate at 5.5 percent.

“This decision is vital for maneuvering through global uncertainties and turbulent economic conditions. With low inflation coupled with stable policies, businesses can effectively strategize their finances and invest judiciously,” stated Srinivasan Vaidyanathan, Operating Partner at Essar Capital.

“While this approach offers immediate stability, it underscores the need for more proactive policy initiatives to stimulate demand and investment, paving the way for sustained economic growth,” Vaidyanathan elaborated.

The Central Bank has also increased its projection for India’s GDP growth rate to 6.8 percent for 2025-26, up from the previous estimate of 6.5 percent, as the execution of various growth-oriented structural reforms, including the streamlining of GST, is anticipated to mitigate some adverse impacts from external pressures.

A report from Axis Securities suggests that the recent GST rate adjustments come at a pivotal moment and are likely to bolster consumption demand during the festive season.

“The regulator has upgraded its growth outlook for Q2 and FY26, while a slight downward adjustment has been noted for H2FY26 onwards. Nevertheless, inflationary pressures are expected to gradually diminish in the near future. The current pause leaves the RBI with the potential to implement a 25bps rate cut in the next meeting, considering ongoing growth momentum and anticipated easing of inflationary pressures,” the report indicated.

Aditi Gupta, economist at Bank of Baroda, pointed out that the RBI's growth and inflation forecasts suggest there is potential for further policy relaxation, although the extent will be limited.

“We predict the terminal repo rate will settle at 5.25 percent; however, the timing of the next rate reduction will be critical,” Gupta noted.

The RBI Governor also announced several regulatory measures aimed at enhancing compliance, improving credit flow, managing foreign exchange, protecting customers, and advancing financial markets.