Wait and watch till August | Business Line

Wait and watch till August | Business Line

My response to the article:

The timing of Elections, 2014
did cause some dislocation in work relating to Budget, 2014-15 in Delhi and
finalisation of Monetary Policy for the current year in RBI. While Reserve Bank
of India could factor in the uncertainties and move forward with policy
formulation, at ministerial level, things will stabilise only after Finance
Minister finalises his maiden budget. As results of any policy measure by the
central bank will be dependent on the supportive policy initiatives from the
central government, RBI Governor cannot be blamed for the ‘wait and watch’
approach he has opted for the time being. Still, to the extent possible, RBI
has made clear its expectations and has not stopped from doing what the Bank
considered best in the given circumstances.

In the context of the new
government’s commitment to honour election promises, many of which will have an
impact on resources availability and prices, RBI’s expectation about level of
inflation at 8 per cent by January 2015 and at 6 per cent a year later are
predictions based on prevailing situation. Depending on the measures by the
government to fuel growth and improve the financial position of less
privileged, the impact of inflation too will vary, making numbers less
The silver lining is the better
coordination between finance ministry and RBI as is evident from the more
cordial language used in communication by both. Let us wait and watch.
M G Warrier, Mumbai


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