All the factors for India are positive. Dr Reddy has confirmed that and more.
He has left everything unchanged, as it should be. The markets were clamouring for a rate cut, the rupee ever strong against the dollar and have been exuberant for some time.
The Governor has reminded us that we need to moderate our expectations because growth is here to stay and inflation can rear its head when one is not looking. He has alluded to the positions and asked corporate governors to put a hedging policy in place.
He has reiterated the policy stance of softer rates and continued build up of foreign exchange reserves to take into account anticipated current account deficit and also liquidity at risk, arising from unanticipated capital movements.
He has repeated the warning given by his predecessor in case the present market conditions change, it may be appropriate to take monetary measures that may not be in consonance with the present easy conditions. Following this warning he has exhorted banks to quickly build the 5 per cent investment fluctuation reserve. On the whole, Dr Reddys inaugural Monetary Review and Credit Policy statement contains no surprises, holds the course to meet the demands of an exciting future for India Inc.
Uday Kotak, Vice-chairman & MD, Kotak Mahindra Bank