Let Rajan’s wisdom rule
As is well known, RBI is scheduled to review its monetary policy at its committee meeting on February 2. However, speculations are already rife in the media about the likely course of action which the RBI Governor may take in the wake of global uncertainties and the forthcoming budget for the FY17 slated for February 29 later this month. Interestingly, Dr Raghuram Rajan has already spoken his mind at ET Global Business Meet by sending a clear warning against any deviation from the current path of fiscal consolidation, the one that aims at achieving a fiscal deficit target of 3.9% of GDP this year. Further, any government move to go in for a spending spree could also adversely affect the central bank’s targeted inflation mark of 5.6% (CPI) this fiscal. Though there is a big clamour for a rate cut from some quarters this time, but given the fact that economists, bankers and policy analysts are not on the same platform on this key issue, the Governor should take the final call keeping in view the overall economic scenario of the country. Let him do his job in a free and fair manner.
S Gupta, Delhi
RBI may go for ‘status quo’
The level of inflation now is in tune with RBI’s expectations and measures aimed at ensuring sustained fiscal deficit are well on course. There is certainly room for the RBI Governor to make a cut in the key policy rate, by a minimum of 25 bps, to give an additional impetus to growth—despite the high figure forecast, this has to pick up further for situation on ground to improve. However, as the Union budget is round the corner, coupled with looming uncertainties persisting in terms of a high volatility experienced on certain fronts, Governor Rajan would perhaps prefer to hold the rates and maintain a status quo for now in the monetary policy review meet slated for February 2. Concerns about the high quantum of stressed loans in the banking system should also be engaging his attention.
Srinivasan Umashankar, Nagpur