Why private sector capex may not take off quickly— सविस्तर माहितीसाठी इकॉनॉमिक टाइम्स मधील बातमी वाचावी.

The big story from Wednesday’s monetary policy decision is not the dispute between the government and the Reserve Bank of India about interest rates.

It is what deputy governor Viral Acharya said at the press conference after the policy announcement about how to spur growth and his answer was interesting for what it revealed about RBI’s thinking about tools to spur growth and how that differs from that of the government.

“In the meantime, what is likely to work better than interest rate policy in responding to growth challenges is a targeted intervention to create greater lending capacity for the healthier sectors of the economy that have recently slowed down.”

In other words, what RBI is saying is that interest rates are no longer effective in spurring growth given that the actual slowdown in private capex could be caused by banks’ inability to lend. It is better to solve that problem first than focus on rate cuts, which may or may not be fully transmitted.

via Why private sector capex may not take off quickly

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