RBI’s cautious stance on managing inflation is all the more welcome
CII feels that “in uncertain times, this is strategically a good stance, as long as the RBI explicitly makes it known that it can take any action pertaining to key rates if the situation demands” whereas ASSOCHAM feels that the restraint shown by RBI would make it difficult for some industry segments to cope up with slackening demands, rising imports and high borrowing costs.
The standstill approach as adopted by RBI will provide it with the flexibility to move either ways based on domestic & global developments for it provides ample scope for future rate cuts as well as sufficient liquidity for business to avail loans and pursue growth. The RBI is in wait & watch mode and is in no hurry to pare rates, given the vulnerability of Indian economy at this stage on imported crude & potential food imports.
CII feels that “in uncertain times, this is strategically a good stance, as long as the RBI explicitly makes it known that it can take any action pertaining to key rates if the situation demands” whereas ASSOCHAM feels that the restraint shown by RBI would make it difficult for some industry segments to cope up with slackening demands, rising imports and high borrowing costs.
The standstill approach as adopted by RBI will provide it with the flexibility to move either ways based on domestic & global developments for it provides ample scope for future rate cuts as well as sufficient liquidity for business to avail loans and pursue growth. The RBI is in wait & watch mode and is in no hurry to pare rates, given the vulnerability of Indian economy at this stage on imported crude & potential food imports.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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