Putting monetary policy in context - The Hindu

Putting monetary policy in context - The Hindu


This refers to C R L
Narasimhan’s article “Putting monetary policy in context”(Financial Scene,
February 2). In the February 3 review and when Dr Raghuram Rajan will be
presenting his monetary policy statement for the year 2015-16 sometime after
Budget 2015-16, one expects that the new equation between Mint Road and North
Block which allows space for alignment between fiscal and monetary policies
will find expression.
Perhaps, RBI’s monetary
policy statement and the Central Budget may have to make a one time
announcement that these two documents go much beyond ‘base rates’ and ‘tax
This observation is also
in the context of expectations about growth and reduction in base rates
building up in the context of ‘revised growth projections’ with the change in
base year for computation of national incomes from 2004-5 to 2011-12. Change in
base year does not change realities at the ground level, though it is
comforting to find that slowly we are moving to a scenario when more authentic
and current figures will guide our own planning and assessment of our country’s
position vis a vis other developing nations by other countries and rating
In such a scenario, the
concluding observation in the article, RBI’s
credit policy review might be the right forum to begin that exercise. After
all, the RBI has always been cautious — highlighting the risks to a higher
growth as well as lower inflation. It is these areas that should command
maximum attention in tomorrow’s policy statement”
deserves emphasis.   
M G Warrier, Thiruvananthapuram 


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