Is govt pressurising RBI on rate cuts?
Apropos of the report “CEA: Economic situation warrants easing of rates” (FE, June 8), clearly suggests the government is at loggerheads with the Reserve Bank of India over monetary policy. Yet again, RBI refused to buy the repeated rantings for rate cuts, as approaches to inflation and perceptions on economy differed. Urjit Patel, the successor to the ‘recalcitrant’ Governor, Raghuram Rajan, was expected to play a more yielding role. It did not happen, as the new governor continued the policy of his more illustrious predecessor. In a huff, the government transferred the power to decide the credit policy to a multi-member Monetary Policy Committee, for the Governor to chair it. Therefore, the angry exhortation of the Chief Economic Advisor that the central bank debate with the government to cut rate before the announcement, sound impertinent and anarchic. Over time, the government would strip the central bank of its premier role in shaping the lending policy. And with the fall of the last sentinel of monetary control, the country could lose an alternative vision and direction of progress. One hopes better sense will prevail.
— Haridasan Rajan, Kozhikode
Loan waiver trap
State after state is getting trapped in the farm-loan waiver syndrome. That does good neither to fiscal propriety nor to the hapless farmer. A broad-based approach, away from the culture of doles and loan waivers, for alleviating agri-distress is long overdue. The crux is to care for small-scale retail and small-scale farming, the largest self-employment sectors in the country. It is high time an income-orientation was brought into farming. The measurement of agricultural growth in terms of the growth rate must relate to the real income of farm families. There have to be avenues for non-farm income in villages, thus keeping the youth from migrating to cities.
— R Narayanan, Ghaziabad