......The government’s disappointment was mirrored by P Chidambaram’s remark that ‘the response of the RBI on 30th October will be far (more) supportive of growth.’ Chidambaram was undoubtedly trying to forestall a slide in investor confidence, but coming from the finance minister this was only a hair short of an ultimatum. Will Subbarao heed it? Or will he dig his heels in and set out to demonstrate the RBI’s independence as he did in July? The policy statement shows that he has left himself with ample room to do either, for it states ‘the stance of monetary policy (in October) will be conditioned by careful and continuous monitoring of the evolving growth-inflation dynamic.’ This obfuscatory language cloaks a simple dictum-the RBI will lower interest rates only if, in its assessment, inflationary pressures decline significantly in the next six weeks. ......
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