When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?

Gives a direct rule-like statement: RBI decreases SLR to increase economic growth (and increases SLR to reduce inflation).

A student could combine this rule with basic macro logic (lower reserve ratios free up bank funds for lending) to infer reduced SLR is growth‑supportive but not automatically 'drastic'.

Defines SLR as a reserve requirement that limits the amount of deposits available for banks to lend (thus constraining credit creation).

Using the definition plus a world map or national GDP data, a student can reason that lowering SLR increases credit supply, which may raise investment and GDP — magnitude depends on bank balance sheets and credit demand.

Presents the multiple-choice question that lists plausible outcomes of a 50 bps SLR cut, showing that increasing GDP drastically was offered as an option among others (e.g., banks cutting lending rates, FIIs bringing capital).

A student could use this to note that textbooks treat several effects as likely and so would seek empirical evidence (credit growth, lending rates, FII flows) rather than assume a drastic GDP jump.

Lists cutting/optimising SLR as one instrument of expansionary monetary policy, implying SLR cuts are part of a toolkit to stimulate the economy.

Combine this with knowledge of other tools (repo rate, CRR) to judge that a 50 bps SLR cut alone is one of several channels — so impact on GDP depends on the overall policy mix and economic context.

Explains overlap between SLR assets and liquidity requirements (LCR/HQLA), indicating SLR changes affect banks' liquidity management and their usable high‑quality assets.

A student could infer that a modest SLR cut changes banks' balance of liquid assets and loanable funds only to the extent those assets are binding constraints, so GDP effect depends on whether liquidity was previously tight.