The economy is now on a quick-growth mode. Inflation rates are more than twice the comfort zone and there are expected to be higher capital inflows. So, the obvious thing is to tighten money supply. RBI had indicated earlier of its intention to exit from the accommodative monetary stance. The hike in the key policy repo rate by 25 bps and reverse repo by 50 bps, as a part of Q1 review of credit and monetary policy, is, therefore, on expected lines.
Srinivasan Umashankar, Nagpur