The RBI has kept inflation as its key priority in signalling funds availability for credit needs, said Ms Shubhada Rao, President and Chief Economist of YES Bank, while commenting on the RBI's first quarter review of the monetary policy for 2012-13.
She told Business Line that the SLR cut shows that funds have been freed up for lending to the productive sectors of the economy. Thus, RBI stands prepared to fund the requirement for growth with open market operations.
She said liquidity alleviating measures essentially show that the RBI believes the productive sector should not suffer for want of credit.
The twin concerns of global uncertainty and domestic macro issues are constraining growth at this juncture, she said.
By addressing fiscal concerns and by freeing up funding for productive expenditure — even from the Government side and even for the capital expenditure of the Government — is probably the starting point to break this vicious cycle, she said.