Ready ground for growth
Apropos of the edit “RBI does well to pause” (FE, December 2), much before the announcement of monetary policy on December 1, it was almost a foregone conclusion that RBI would preserve the status quo. After a long period of lull, growth has now started to assume centrestage and yet in comparison to global standards, the interest rate environment in India is still high and hence, there is a long way to go before we embark on a high-growth mode. The level of inflation may be somewhat comfortable now but many new and emerging issues will continue to haunt Governor Rajan as they hold the potential to cause systemic upside risks to inflation and hence inflation worry can never become a thing of the past. But if his past actions and particularly his immediate previous policy measures, in terms of a surprise cut in key policy rate by 50 basis points, are any indication, it is clear that he will want to kill the element of frustration building up in the system and infuse confidence in restoring growth. The rate transmission, as a matter of fact, has not been happening on expected lines and demand for loans is relatively muted which is inimical for high growth. Rising bad loans, cumulative stress, need for additional capital, and ensuring greater fiscal prudence are issues that will continue to dominate the policy review in the coming times, necessitating credible policy initiatives that involve North Block also. A need for astute management of the food supply situation to tackle the menace of food inflation, cleaning up of the banks’ balance-sheets within a specified time-frame (by March 2017) through improved quality of governance, better recognition of non-performing loans, and getting the broken pieces together to settle some of the outstanding issues are welcome steps. In a nutshell, it is pragmatic to review and wait for the conditions to stabilise further, and borrow time to also understand well what the US Federal Reserve will do as that has huge implication on the global economy, including India. It is never the end of the road in this hugely uncertain economic milieu.
Parties must work together
Apropos of the editorial, “Need to go beyond GST” (FE, December 4), it is laudable that BJP has taken the welcome initiative in arriving at a consensus with the Congress Party for the passage of the GST Bill, and despite knowing the importance of the matter, if the Congress refrains from supporting the government in getting the Bill through Rajya Sabha, it will obviously expose its negative attitude towards much-needed reforms. At a time when the government and the banking regulator are deeply concerned about addressing the issues related to the rising non-performing loans of public financial institutions, the passage of the Bankruptcy Bill would definitely propel the recovery of bad loans and will improve the health of the banking system. In the interest of the nation, the ruling and the opposition parties have to remain accommodative of each other for the smooth and rapid implementation of the reforms and that is essential for economic growth and development. Currently, on account of various external and internal hurdles, growth is not as was envisaged and as such, stimulative reforms are essential to push the economy from its sluggishness. Leaving aside ideological differences, all political parties should rise to the occasion and work in tandem to achieve the goals set for the progress of the nation.
Make growth central
There have been many reasons for India to celebrate this year. We have become the fastest-growing nation in the world. We have chalked out a climate commitment that safeguards our rights as a developing nation while making our contribution to reducing emissions significant. All that is now needed is fostering the right climate for growth. Let the agenda of growth and the distribution of its fruits remain central to the India story for the years to come.