We welcome the rate cut by 25 basis points announced by the RBI on April 5, 2016. This is aligned with the government's fiscal consolidation path. This will give momentum to the country's economic growth by infusing liquidity into the system and also help strengthen the rupee. We hope the banks will transfer the benefit to borrowers in the form of lower interest rates.
In India, infrastructure and power projects need long-term financing at competitive rates and the rate cut, which will lead to increased cash flow, is a move in the right direction. Timely project financing and availability of capital at lower cost are pivotal to renewable energy sector. This step by the RBI will add momentum to the industry, attract further investments in renewable energy assets and enable the achievement of the ambitious target of 175GW by 2022. The renewable energy industry poses a $200 billion opportunity and the rate cut will be a catalyst for the nation's economic development.
This move by RBI will give the corporate houses greater borrowing power and lead to increased investment in new projects, provide a boost to the capital goods sector and give an impetus to the Prime Ministers Make in India vision. The rate cut also opens a window of opportunity to Independent Power Producers (IPPs) to refinance their existing projects with lower interest rates and further sector growth alongwith helping to reduce the overall cost of energy and power.