This refers to the editorial Will RBI do its bit (FE, October 30). The dire, uncertain condition of the Indian economy has been perfectly mirrored in the RBIs quarterly survey. This editorial and the front page story SBI capex loan crash mirrors investment strike at India Inc told us the facts. Inflation will likely remain on a sticky path. Fiscal cliff of the US might reduce the growth rate of the developing world, including India. Its good the current government seems on a reform path. Lets hope that further dose of economic reforms will accelerate our economic growth.
BYK College of Commerce, Nashik
By re-electing Obama, the Americans have proved to the world that their decision to first elect him as the countrys first black President in 2008 was not a mistake. They have affirmed their faith in Obama as the one who can bring about the change the country needs. Obama, too, should not let his fellow Americans, and the world at large, down. We now wish to see Obama at his best during his second coming.
Tharcius S Fernando
RBI, in its review of the monetary policy, has once again preferred not to tinker with the key policy rates but has reduced the cash reserve ratio by further 25 basis points to 4.25% to infuse more liquidity into the banking system and make banks comfortable to operate. To that extent, the banks will be left with more lendable funds and earn interest thereto. There is, however, a feeling about the differences in perception between RBI and the government over the rate cut to happen (Ekla chalo, FE, October 31) and (Partial fix for NPAs, FE, October 31). If the RBI action is anything to suggest, it is amply clear that RBI would not like to risk cutting the repo rate for now and get inflation get out of control again, for the sake of growth, even though growth concerns have picked up after several months of moderation. The government, on its part, must strive to ensure greater fiscal discipline consistently that will effectively support RBI in its endeavour to achieve the set goals. Again, in the backdrop of a sharp increase in the quantum of restructured loans owing to variety of reasons, a hike in the provisioning from 2% to 2.75% on such restructured standard loans is a good step forward to raise the level of safety cushion and in ensuring financial stability, though it will affect banks profitability. As the popular saying goesNo pain, no gainunderstandably, the policy initiatives taken might not bring cheer in the short term but definitely has the potential to turn the economy around in the medium to long term. In a nutshell, it is a well-documented policy aimed at striking a right balance between growth and inflation and take the economy on a higher growth pedestal.