The recent decision by the Reserve Bank of India (RBI) to reduce the repo rate by 50 basis points—from 6 per cent to 5.5 per cent—has been welcomed by trade representatives in Jharkhand, who believe the move will have a positive bearing on consumption trends, particularly within the fast-moving consumer goods (FMCG) sector.

Reacting to the announcement, the Jharkhand Consumer Product Distributors Association (JCPDA) said the timing of the cut is significant, especially as consumers continue to reel under the effects of inflation.

Advertisement

Sanjay Akhauri, president of JCPDA, said the decision was expected to ease borrowing costs and revive demand, both in urban and rural markets. “In times of high inflation, such a step by the RBI will help lower the prices of consumer goods, enhancing purchasing capacity and improving consumption patterns across geographies,” he said.

According to Akhauri, the 50-basis-point cut exceeded market expectations and would likely enhance liquidity in the economy, giving a much-needed fillip to overall growth. He noted that sectors such as housing and automobile sales typically see immediate benefits from lowered interest rates, but emphasised that the FMCG sector, too, stands to gain through increased consumer expenditure and business confidence.

Despite the broadly positive outlook, the Association also voiced concern that banks often fail to reflect repo rate adjustments in their lending rates. Akhauri pointed out that while the RBI’s initiative is commendable, its impact on ground realities depends on how swiftly banks reduce their rates of interest.

“There have been repeated instances where banks cite procedural delays or internal constraints to avoid passing on the benefit of monetary easing. The RBI or the Centre should step in to issue clear directives to ensure uniform compliance,” he said.

In addition to the monetary policy development, the JCPDA highlighted the government’s recent reduction in import duties on raw materials such as crude oil and palm oil, from 20 per cent to 10 per cent.

The move, they argue, could lower production costs for FMCG companies. Akhauri called upon manufacturers to reconsider their pricing structures in light of this, ensuring that the benefits reach consumers directly. “The government must ensure this reduction reflects in retail prices and does not merely cushion company margins,” he added.

Akhauri expressed hope that the combination of lower interest rates and reduced import duties would encourage renewed investment in the sector and potentially mark the beginning of a healthier consumption cycle. According to him, the dual impact of monetary and trade policy adjustments could open the way for stronger growth across several domestic sectors if implemented efficiently.

As trade sentiment in the state trends toward cautious optimism, the JCPDA has urged both financial institutions and FMCG firms to align with the broader policy intent. In their view, the success of these economic measures will ultimately depend on timely action, transparency in pricing, and a firm commitment to passing the benefits to the end consumer.