• Notification Date: 19-02-2025
• Notification No: N/A

Axis Bank Economist: Liquidity, and Not Rate Cuts, Is the Key of Growth

Axis Bank Chief Economist Neelkanth Mishra has urged the Reserve Bank of India (RBI) to aim at easing liquidity instead of lowering interest rates in order to push economic growth.
Mishra argued that recent cuts, including the latest 25 basis point reduction, will not spur borrowing since the tight conditions in liquidity are still holding back the transmission of lower rates. He proposed that the RBI focus on customary open market operations and incremental cuts in the cash reserve ratio (CRR) to add liquidity.

Mishra, a member of the Prime Minister's Economic Advisory Council, emphasized that liquidity needs to improve rather than focus on further rate cuts that have so far failed to boost borrowing amid high money costs.
He reminded that liquidity had been a concern that was haunting the market over the last 18 months.

In the coming times, Mishra projects India's GDP could grow at 7% from Q2FY26 on domestic strong factors despite outside world uncertainty. He also cautioned about impending power shortages due to constrained power generation capacity and underlined the requirement for immediate investments in that sector along with nuclear power.

The observations of Mishra indicate the necessity of a balanced fiscal and monetary policy path to ensure economic growth in a sustainable manner.