With Budget 2024, Is The Stage Set For Cheaper Loan EMIs, Lower Interest Rates For You?

The interim Budget 2024 has set the stage for more affordable housing loans and a general decrease in interest rates. The lower fiscal deficit is expected to translate to reduced loan EMIs and interest rates for the middle class. Find out how.
Loan emi interest rate to go down

The interim Budget 2024 has set the stage for more affordable housing loans and a general decrease in interest rates.

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The interim Budget 2024 has set the stage for more affordable housing loans and a general decrease in interest rates. A reduced fiscal deficit of 5.1 per cent has led to a borrowing requirement that's nearly Rs 1 lakh crore less than anticipated. Moreover, with a greater portion of government expenditure directed towards capital expenditure, inflationary pressures are expected to be mitigated, paving the way for the Reserve Bank of India (RBI) to lower rates going forward, Times of India reported, citing lending institutions.

Fiscal Deficit And Lower Interest Rates

By maintaining a lower fiscal deficit and cutting back on central government borrowing, the government is perceived to be nudging the RBI towards enhancing liquidity and easing interest rates. The central message emanating from North Block is straightforward: The government has played its part; now, the ball is in RBI's court to foster private sector investment by making borrowing more cost-effective.
Niyati Mavinkurve, a CA and a digital content creator, noted, "the FM had already announced that this would not be a big bang budget and she delivered on that promise. It was very heartening to however note that the fiscal deficit numbers were lesser than predicted. Lower fiscal deficit means lower interest spend on borrowings and more money available to spend on things that matter."
Further, the introduction of two housing affordability initiatives is anticipated to make housing loans more accessible. The government is looking to launch a scheme to promote middle class to buy/build their own houses. The Pradhan Mantri Awas Yojana (PMAY) Grameen, focused on building 2 crore houses in the next five years, is also likely to give impetus to home loans.

Sector-specific Easing In Interest Rates

Entrepreneurs and those in the tourism sector are likely to see benefits of lower interest rates and cheaper loans. To promote research, development and innovation, the government will set up corpus of Rs 1 lakh crore for providing interest-free loans for 50 years. The funds will provide no to low interest rates to encourage private sector to scale up innovation and research.
To encourage tourism, the government plans to provide long term interest free loans to the state. Under ‘Viksit Bharat’ scheme, provision of approximately Rs 75,000 crore as a corpus for providing interest-free loans for 50 has been proposed.
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