A policy decision is good either because it is substantial in its output or symbolic in its intent. Taking this into consideration, the Reserve Bank of India's 13th interest rate hike is unsubstantially symbolic. The RBI's interest rate weaponry in its combat against inflation (symbolising sound economic decision-making) has kept inflation unsubstantially high, the highest among BRIC (Brazil, Russia, China and India group) nations. The present headline inflation of more than 9 per cent is still in the uncomfortable zone. Addressing headline inflation through frequent rate hikes will reduce the confidence level of long-term quality investments and curb India's growth. The good news from RBI is that this will be its last monetary prescription to cure the malaise and the nation hopes that strong fiscal measures are being adopted. It is time that substance overtakes symbolism, and this 13th rate hike is RBI's unsubstantial symbolism at its last best.
S. Vaidhyasubramaniam Thanjavur (HBL)
