Will rate cuts stimulate demand?

Another round of rate cuts by RBI and again economist are discussing whether this will stimulate demand by the public. But will it??? Or government needs to do something more??? Let’s go the basic of this situation. 

Everybody is aware that this financial crisis began due to the bubble burst of property market, which had been growing at an exponential rate. This burst led to the bankruptcy of many banks and let to the bloodbath in the share market across the globe and resulted in credit crunch across the globe. What this has done is that it has directly affected the demand (consumption expenditure) of the public. With so little of money into the system, banks are not in a position to lend money. In order to inject more money into the system the government either goes for expansionary fiscal or expansionary monetary policy. Whereas expansionary fiscal policy involves tax cut, more transfer payments or more investment from the government side, the expansionary monetary policy involves reduction in CRR, SLR, repo rate and reverse repo rates. With these monetary policies more money is injected into the system by providing more money into the banking system. But does this mean the same money is transferred to general public in forms of loans? The answer is NO. Since the crisis happened due to bad investment and bad loans on the banks part, it takes more than rates cut to induce banks to transfer the benefit to the public. This time the banks are very sceptical in giving loans. They already have suffered the brunt of giving too much too soon in hope of better returns. So they are reluctant in transferring the money to the general public. And until or unless the amount of money injected into the system goes into the hand of public we can’t expect increase in demand. So government and RBI have to take some other steps apart from these monetary policies for inducing demand.