The RBI expectedly cut the repo rate last week by 25 basis points, bringing the key lending rate to a six-year low of 6 percent. This came in the backdrop of a steep fall in inflation and weak consumer demand across the country. However, the level of capacity utilisation for Indian corporates is at historically low levels of 70-72 per cent. Thus, fresh borrowings either for capacity expansion or newer projects seem unlikely in the near future. Both the savings rate and the investment rate in the country -- the two major drivers of growth -- have consistently fallen in the absence of strong domestic or global demand.

Source: Economic Times August 11, 2017 08:19 UTC