रिझर्व बँक अति सुरक्षित दृष्टीकोन अंगीकारत आहे का ? सविस्तर माहितीसाठी बिजनेस स्टैंडर्ड मधील बातमी वाचावी.

The RBI has given other justifications, too for its decision. These include the lack of clarity about the “transitory” effects of demonetisation, fiscal slippages due to farm loan waivers and inefficient transmission of earlier rate cuts. On the face of it, it still considers rising inflation a bigger threat than a more prominent slowdown. Possibly that is why the fact that Q4 FY17 gross valued added fell to 5.6 per cent or that GVA (excluding agriculture and the government sector) fell to 3.8 per cent do not figure in the statement. Instead, the RBI takes note that, according to the May-end provisional estimates, the full year GVA for FY17 was just 10 basis points lower than the estimates in February.

Many in the markets have, however, latched on to the overall softer tone of the policy to say the door has been left open for a rate cut in August. But the concern is it may remain only a hope as there is no clarity on whether the RBI will prefer to wait till the inflation trend is even lower than its own projections. No wonder, the decision was not unanimous as one external member of the monetary policy committee dissented. In fact, by all available metrics, the timing was ripe for a rate cut. Inflation had been trending down — retail inflation for April came in at less than 3 per cent, which was a multi-year low. On the economic growth front, the latest CSO data showed that a domestic slowdown had set in since the start of the 2017 financial year and this trend accentuated after demonetisation in November which saw credit growth and private investment plummet. On top of that, crop production is expected to hit record levels, including a glut in pulses, and the forthcoming monsoon is going to be normal. There is more: Internationally, crude oil prices are expected to remain in a comfortable band.

In that sense, the decision to go ahead with a pause on the repo rate and allowing only a 50 basis point cut in the SLR (the portion of money banks need to invest in government bonds and gold) is a disappointment. In any case, the latter is of hardly any use to the system given that banks have already excess holdings in government securities. In its concluding statement, the RBI has said, “premature action at this stage risks disruptive policy reversals later and the loss of credibility.” The question is if growth does not rebound sharply soon enough, policy reversals and loss of credibility may come back to haunt the central bank.