RBI cuts repo rate from 4.4% to 4%. Is this going to help revive the economy?
Repo Rate, or Repurchase rate is the rate at which RBI lend to banks. When reduced, it will help banks to borrow more money and provide more loans to the public, there by increasing money supply. (1/4)

These lending by the banks can be two types. Loans for households for consumption and those for firms for further investment. Knowing that demand is low and there's no probable increase in the near future, firms would be reluctant to borrow and invest right now. (2/4)

Similarly, expecting a bad economy, households would not bother to borrow for consumption, since employment and income look worrying. No rational human being would want to borrow and be burdened with interest payments when there's no hope regarding the future. (3/4)

To sum up, expectations of both households and firms aren't positive. Therefore, this move is not exactly going to revive the economy as of now. What we need is a focus on the demand side to boost demand and consumption. People need more money, not debt. (4/4)

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