RBI’s 50 bps Repo Rate Cut Fuels Energy Optimism Amid Easing Inflation Outlook

The Reserve Bank of India (RBI) has announced a 50 basis points cut in the repo rate, bringing it down to 5.5 percent. The central bank also changed its monetary policy stance from ‘Accommodative’ to ‘Neutral’ following the Monetary Policy Committee (MPC) meeting in Mumbai. The move is aimed at stimulating growth while keeping inflation expectations anchored.

RBI Governor Sanjay Malhotra said the decision reflects a favorable inflation outlook, with the Consumer Price Index (CPI) forecast for FY26 revised downward to 3.7 percent from 4 percent earlier. The twin developments, rate cut and neutral stance are being widely interpreted as a calculated push to stimulate credit demand and energise core sectors, particularly renewable energy.

The rate cut comes as a welcome tailwind for India’s renewable energy sector, which is increasingly reliant on low-cost capital for scaling up operations and integrating advanced technologies. Experts believe that cheaper financing will catalyse investment in solar, wind, hybrid, and grid modernisation projects.

“The RBI’s back-to-back rate cuts this year are a timely boost for India’s renewable sector. Lower rates not only make project financing more affordable but also encourage greater domestic and international investment. This supportive environment will accelerate innovation, hybridisation, and ensure reliable, clean energy for India’s future,” said Siddharth Bhatia, Managing Director of Oyster Renewables.

The central bank’s decision is also seen as a broader effort to counter internal and external economic uncertainties and revive private sector investment.

“The RBI’s front-loaded 50 basis points rate cut is a decisive decision amidst internal and external disturbances,” said Srinivasan Vaidyanathan, Operating Partner at Essar Capital. “With borrowing costs easing, demand is expected to rise, boosting consumption and lifting market sentiment. Together, these dynamics provide a solid runway for India’s GDP growth to accelerate,” he added.

Dhanpat Nahata, Managing Partner, Essar Capital, emphasised, “Amid ongoing geopolitical tensions and softened FPI inflows, India Inc was looking for clear direction and prioritisation, and the RBI’s monetary stance has delivered just that. The 50 bps cut signals a strong push toward boosting capital investments, supporting domestic expansion, and reinforcing policy support for infrastructure, industry, and macroeconomic stability. It reflects a decisive step toward sustaining India’s growth momentum in a complex global environment.”

From traditional energy players to clean tech innovators, the policy shift is likely to rejuvenate confidence across the energy value chain.

“This is a clear signal to industry to accelerate. With inflation anchored and liquidity improving, this pivot supports long-gestation investments across energy value chains. For upstream and transition-fuel players, it opens up room to scale exploration, enhance output, and support India’s energy security goals with confidence,” said Pankaj Kalra, CEO of Essar Oil & Gas Exploration & Production Ltd.

Ratul Puri, Chairman, Hindustan Power, said, "RBI's decisive move to cut the repo rate by 50 basis points and reduce the CRR by 100 basis points signals a strong intent to stimulate growth. The Monetary Policy Committee (MPC) has now cut the repo rate by a total of 100 bps over the past four months. This is a welcome step for capital-intensive sectors like power and infrastructure. Lower borrowing costs will accelerate project execution, ease working capital stress, and unlock fresh investments across the energy value chain. The shift to a neutral policy stance also reflects macroeconomic confidence, reinforcing India’s long-term infrastructure ambitions."

As India targets 500 GW of non-fossil fuel capacity by 2030, policy support through monetary levers like interest rate cuts could amplify private investment in renewable infrastructure, energy storage, and EV ecosystems.