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:
Letters
Miles to go
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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