Responses to Shaktikanta Das speech at Global Business Summit

 RBI Governor Shaktikanta Das spoke at Vibrant Gujarat Summit

A couple of responses published in Business Standard, January 21, 2019:


Miles to go
It was interesting to read the report by Anup Roy “ Das favours flexible policy objectives” (January 19). The speech delivered by the Reserve Bank of India (RBI) Governor at the Vibrant Gujarat Summit is nothing extraordinary. It neither spells out the road map for new dynamism nor any noticeable policy shift by the central bank. It aims at bringing the central bank's actions in alignment with the expectations of the government: Mainly a reduction in interest rates with the hope that it will spurt investments and shows the bank's subservience to the government's policies.
The demand by industrialists for a sizeable reduction in interest rates in the February policy announcement is nothing unexpected. One wonders whether they would be satisfied even with a zero interest rate. As far as cleaning up the balance sheets of the public sector banks is concerned, the less said the better. Further, a marginal reduction in the non-performing assets situation is no matter to rejoice, there is miles to go. Is Mr Das listening?

C V Subbaraman Mysuru

Tight rope walk

This refers to Anup Roy’s report “Das favours flexible policy objectives” (January 19). In his maiden speech as the RBI Governor, Shaktikanta Das has asserted the RBI’s mandated roles without being controversial in expression. As brought out in the report, India’s central bank has all along been playing a proactive role in promoting economic growth and financial inclusion by dovetailing its policies in consonance with the government of India’s (GOI) policy prescriptions.
This occasionally came into conflict with the performance of RBI’s core functions with regard to maintaining price stability and regulation of institutions in the financial sector. With improved transparency in communication, sometimes media and vested interests inflated the differences in policy perceptions between the GOI and the RBI out of proportion.
Viewed from this angle, the clarity in policy perceptions visible in the RBI governor’s speech is soothing and comforting. He is fully aware of the need to balance the twin objectives of economic growth and price stability and will need unreserved support from the GOI. The government will need to follow the required discipline on the fiscal policy front. It is going to be a tightrope walk in an election year for both the finance minister and the RBI governor. Unfortunately, both cannot afford to threaten to ‘walk alone’.

M G Warrier Mumbai


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