Best of the Week | Repo rate rewind: RBI’s wild ride through booms, busts, and bailouts

The repo rate is the Reserve Bank of India’s magic wand—a powerful tool that influences everything from your loan EMI to how expensive your groceries are. 

Let’s break it down: “Repo rate” stands for Repurchasing Option Rate—the interest that commercial banks pay RBI when they borrow funds, usually overnight, and hand over government securities as collateral. The lower the rate, the cheaper it is for banks to borrow for their operations, primarily lending. And just like that, RBI controls how much money is sloshing around in the system.

Whenever RBI feels the economy needs a boost, it slashes the repo rate. This makes it easier (and cheaper) for banks to lend money, which means more cash in circulation, more spending, and ideally, higher growth. But when inflation starts acting up, RBI tends to hike the rate to put the brakes on excess liquidity.

The repo rate right now

On 9 April, RBI gave the economy a shot of relief by cutting the repo rate by 25 basis points to 6.00%. This came after a similar cut on 7 February, marking two back-to-back rate reductions. 

A walk through India’s repo rate history

Prior to that, RBI had held the repo rate stable at 6.50% for two years. This rate was first set on 8 February, 2023. But that was after a climb in 2022, when RBI—spooked by post-pandemic inflation—cranked the rate up from 4.00% in April 2022 to 6.25% by December. One hike after another. 

And during the covid storm? The repo rate had been put in a deep freeze—slashed to 4.00% in May 2020 and left there until early 2022. It was all about keeping the economic engine running when the world came to a screeching halt.

Pre-covid, RBI had already been trimming the rate—from 6.50% in 2018 to 5.15% in late 2019—trying to revive a sluggish economy.

But if you go further back, 2008 was the mother of all spikes. During the global financial crisis, the repo rate skyrocketed to 9.00% in July 2008, the highest in recent history. The economy was battling runaway inflation, and RBI wasn't playing around. From the early 2000s through 2007, the rate moved in a gentler wave—dancing between 6.00% to 7.75%, mirroring a more stable economic phase.

On to the best of Mint’s work from this week.

Startups get a breather

In a move that could bring relief to India’s startup sector, the Centre is considering tweaks to the proposed digital competition bill, possibly raising the bar on financial thresholds and trimming the list of digital services it targets. Why? So that small and mid-sized startups don’t get tangled in red tape meant for tech titans like Amazon, Google, and Meta. The bill, unveiled a year ago, had cast a wide net covering nine digital segments and firms with large user bases or sales. But after feedback from startups, the government is thinking: maybe don’t treat Nykaa like Netflix. The law still aims to keep digital gatekeepers in check with stricter compliance rules—like not favouring their own products or misusing data. Read more.

From GATT to gatling guns

On April 2, Trump didn’t just slap tariffs—he rewrote the rulebook on global trade. In a 48-minute speech, he bulldozed decades of painstaking diplomacy that began with GATT in 1947 and peaked with the WTO’s birth in 1995. Now? A universal 10% tariff on all imports, with much higher duties for nations enjoying trade surpluses with the US—India got 26%, China a brutal 54%. Even penguin-populated islands weren’t spared. Trump called it “liberation day”; critics called it economic vandalism. While Trump dreams of reviving American manufacturing glory, experts warn: history says otherwise. Tariffs rarely bring jobs back—they often send prices soaring and economies spiraling. Read more.

‘Black Monday’

Monday felt like déjà vu from the pandemic crash days. Global jitters over US President Donald Trump’s tariff war wiped out ₹14 trillion in Indian investor wealth. Dalal Street bled red—Nifty 50 and Sensex nosedived 3%, their worst since June 2024. No corner of the market was spared. Small-caps and mid-caps plunged 4%, and 645 stocks hit 52-week lows. Fear gripped investors hard—the India VIX ‘fear gauge’ spiked over 65%! Other Asian markets suffered a similar, or worse, fate: Hang Seng crashed 13%, Taiwan fell 10%, and Japan dropped 8%. The chaos triggered memories of Black Monday in 1987. Kotak Mahindra AMC's Nilesh Shah call it “covid flashbacks”, though India’s fall was less dramatic than that of the US. Read more.

Shipbuilding gets a lift

India is setting sail to become a global shipbuilding force, teaming up with maritime powerhouses from South Korea and Japan. Cochin Shipyard is in talks with Hyundai Heavy for a state-of-the-art facility in Kochi, while Mitsui and Hanwha are exploring joint ventures near major ports. With Asia’s top shipyards overbooked, India is seizing the moment to fill global demand gaps. “We’re close to signing a deal,” Cochin Shipyard’s CMD Madhu Nair said, hinting at big hulls and even bigger ambitions. The upcoming shipyard, backed by the Cochin Port Trust, will roll out cargo and container vessels with tech muscle and global scale. By 2047, India hopes to capture 69% of its own fleet with India-built ships. Read more.

Inside the ratings scam

When Vishal wanted a cooler this summer, he didn’t browse Amazon—he texted a Telegram group for a “deal”. Sounds harmless, right? But here’s the twist: these aren’t just bargain-hunting forums—these are secret hubs for fake five-star reviews. Vishal, Samrat, and Ashutosh are part of an underground web where reviewers get freebies or steep discounts in exchange for glowing product ratings on Amazon and Flipkart. It’s slick, organized, and deceptive. Mediators in massive Telegram and WhatsApp groups—some with thousands of members—coordinate the entire racket. A recent CloudSEK study revealed over 12,000 fake reviews in just 10 months, influencing purchases worth ₹50 lakh. Read more.

RBI’s growth pivot

RBI governor Sanjay Malhotra cut the repo rate by 25 basis points to 6% and switched the policy stance to ‘accommodative’. Translation? The central bank is ready to go all in on supporting growth, even as global trade tensions and tariffs threaten to slow things down. While inflation looks tame, RBI trimmed both growth and inflation forecasts for FY26 to 6.5% and 4%. The surprise wasn’t the rate cut—it was the shift in stance. Only three out of 10 economists saw it coming. RBI is clearly more worried about growth than inflation now, with Malhotra admitting that global tariffs are casting long shadows. And yes, liquidity will stay surplus to help banks pass on the rate cuts. Read more.

Wipro’s quiet comeback

Big wins don’t come easy at Wipro, but CEO Srini Pallia is slowly changing that narrative. In just 12 months, the IT giant snapped up two large deals—$650 million from the UK’s Phoenix Group and a $500 million US contract—raising hopes of a turnaround. Pallia, who stepped into the role in April 2024, is Wipro’s eighth CEO since 2000. But unlike his predecessor, he’s keeping it old-school, leaning on loyal internal leaders, trimming unnecessary costs, and moving away from headline-grabbing acquisitions. There’s a quiet shift underway: fewer luxury offsites, stricter travel, and a laser focus on profitability. Layoffs and margin-focused reforms have already started showing results. Analysts remain cautiously optimistic, though—Wipro’s seen false starts before. Read more.

India’s trade moment

India got a rare 90-day pause from US tariffs, and it’s not wasting a second. With tensions flaring between Washington and Beijing, New Delhi sees this as a golden window to lock in key trade deals with the European Union, the UK, Australia, and more. Talks with the US on a bilateral trade agreement are moving faster than expected, even as experts urge caution. The pause is also pushing India to scrutinize backdoor Chinese imports via ASEAN nations. For Indian manufacturers, it’s game time. Global buyers are turning away from China, and India has a chance to prove its supply chain muscle. But to truly cash in, capex and scale are non-negotiable. Read more.

UPI takes the lead

India’s love affair with UPI just hit a new high! In 2024, UPI made up 65% of all digital payment volumes, as per a report by Phi Commerce. EMI options followed at 20%, while credit cards held 10%. Net banking and direct transfers? Just 5%! From grabbing coffee to paying tuition, UPI is now everyone’s go-to—especially in retail, food, and e-commerce. For bigger expenses such as on cars or education, EMI and credit cards still dominate. Even the government is on board, using UPI and direct transfers for tax collection and subsidies, driving inclusion in semi-urban and rural areas. And yes, digital payments are now seasonal too—August sees a rush in education fees, March heats up for healthcare, and retail explodes during festive sales. Read more.

Kohli’s brand bet

Virat Kohli is swapping the Puma pounce for a new sprint with Agilitas! With his ₹110-crore deal with the German giant now history, Kohli is betting big on homegrown ambition. The star cricketer will not just invest in Agilitas—founded by former Puma boss Abhishek Ganguly—but will also lead the charge as brand ambassador. At the heart of this move? One8, Kohli’s own lifestyle label. Agilitas will help turn it into a global sportswear force. The vision: an Indian brand that competes with global names—think sneakers, tees, tracks, all powered by Virat’s brand value. Puma wished him well, but Kohli’s now walking (and batting) in his own shoes. Read more.

That’s all for this week!

If you have any feedback, want to talk about food, or have anything else to say about our journalism, write to me at siddharth.sharma1@htdigital.in or reply to this mail. You can also write to feedback@livemint.com.

Best,

Shravani Sinha,

Senior Correspondent