Letters to the editor

By: | Published: August 7, 2015 12:30 AM

RBI on the right course

RBI on the right course
Amidst growing uncertainties, RBI published its latest mid-term credit and monetary policy. Turbulence in the global financial markets, the weakened pace of economic recovery, the uneven spread of monsoon and persisting upside risks to inflation have perhaps induced RBI to maintain a status quo on key policy rates. The stance of RBI also gives the impression that past rate-cuts have not really translated into contributing the required level of growth momentum and hence, it wants banks to act on these cuts fast by cutting their own lending rates. But, concomitantly, there are growing concerns about the asset quality of banks, with a consequential effect on their profit margins and capital adequacy—these are issues that must engage attention at the top. Forget the about long-term, the immediate outlook makes it difficult to devise doveish policies. That’s the height of uncertainty in the times we live in now. It was rightly predicted in the early 1990s, when globalisation-liberalisation of the Indian economy was set in motion, that this would lead to greater uncertainty in the times ahead, requiring regulators to consistently and consciously realign the policies in tune with market forces. The country has been long striving to prop up the growth rate. Overall, the move may appears conservative, but it is quite assertive with regards to the tasks ahead and the need to confront issues with greater clarity and precision.
Srinivasan Umashankar, Nagpur

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