India had recently emerged as the fifth largest economy in the world surpassing the United Kingdom. Despite this, the inflation rate in the country is not good and the rate has been increasing at regular intervals. To deal with the increasing inflation rate, the regulatory body Reserve Bank of India took a sensational decision.
To fight the ever-increasing inflation rate, the RBI announced an increase of 50 basis points in the repo rate and the new development takes the repo rate to 5.9 percent. The increase says that people paying EMIs will have to face an additional burden. The increase in the points was announced by RBI Governor Shaktikanta Das.
The EMIs in India have been becoming a burden on the customers as the repo points are being increased at regular intervals. The new hike in the repo points marks the fourth hike since May.
The current repo percentage which is now at 5.90 percent marks the highest in the last three years. Back in April 2019, the repo rate stood at 5.40 percent and now the rate went by.
There is a connection between the repo rate getting hiked and the customers facing the burden of the EMIs. Repo rate deals with the rate, the banks pay to the Reserve Bank of India for the short-term loans they take.
This directly makes the EMIs costly as the banks impose their interests on the customers. Customers have to pay high amounts as the EMIs than the amount they have to pay. Based on their loan amount, the loan period might also get increased to cover the whole amount.
As India is a developing nation, the global scenarios will impact India and the developments will leave a big toll on India as well. As a result, the Reserve Bank of India cut short the growth projection rate in the fiscal year to 7 percent. Earlier, the central bank said that the projection rate can be 7.2 percent.
The repo rate might even impact the construction sector as well. People who want to go for a home loan might change their minds looking at the rise in EMI amounts. Those who are paying EMIs now will have to pay a higher amount and the amount might even go further making people have a second thought.
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