Budget with ET Tax calculator(You can now subscribe to our(You can now subscribe to our Economic Times WhatsApp channelThe Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), under the leadership of new Governor Sanjay Malhotra, announced a 25 basis point reduction in the repo rate , lowering it to 6.25%.Malhotra revealed that the committee also decided to maintain a neutral stance, a shift made in October of the previous year, indicating a flexibility to adjust policy rates in response to the evolving economic environment.The RBI had kept the repo rate unchanged at 6.5% for the previous eleven consecutive meetings.
In the December policy meeting, the MPC voted 5-1 in favor of maintaining the rate, focusing on stability while continuing to monitor inflation trends.Additionally, the December policy included a 50 basis point reduction in the Cash Reserve Ratio (CRR), bringing it down to 4%, aimed at enhancing liquidity and supporting credit growth.For the financial year 2024-25, the RBI has projected India’s real GDP growth at 7.2%, while the Economic Survey forecasts a 6.4% growth, in line with the National Statistical Office (NSO) estimate.The expectations of rate cut had soared in the light of the Union Budget for FY26, which lowered the tax burden on the common man in order to resuscitate spending.
The Budget also kept the capital expenditure target for the next fiscal at almost the same level as budgeted last year (which was revised down this year).

RBI MPC cuts repo rate for first time in 5 years: Governor Sanjay Malhotra administers a growth pill with 25 bps rate cut