Growth has taken a backseat in RBI’s policy review, and inflation control has come to the forefront.
This is how Dr Biswa Swarup Misra, Associate Professor, Xavier Institute of Management, Bhubaneswar, reacted to the RBI’s mid-quarter policy review on Monday.
Speaking to
He said that altogether the RBI cannot be blamed, as a lot of inflation is because of the policies of the Government.
Stating that the ball is now in the court of the Government to do the needful, he said: “Till date, the RBI has been trying to accommodate for the Government’s failures.”
The market was expecting a 25 bps cut in repo rate, as it would have acted as a sentiment booster. This was because the RBI had earlier mentioned that it was concerned about the growth. But now growth has fallen of a cliff.
“The RBI has completely left the growth concern to the Government to take the necessary structural and administrative measures,” Dr Misra said.
The good thing is that the central bank has not succumbed to ‘informal pressures’ from the Finance Ministry, he said.
Growth rate
Stressing the need for a broader debate on the potential rate of growth, he said Indians will have to live with lower growth rate for sometime.
He said that a combination of 7 per cent growth rate and 8 per cent inflation would be good achievement in the present context. But this does not seem likely, he added.