This is with reference to the editorial “Behind the curve” (Business Line, December 17). The rupee has plunged to a record low against the dollar and is under stress. Unsustainably high level of inflation, growth rate falling below 7 per cent, and widening fiscal deficit are worrisome factors. Pressure was obviously on RBI not to increase the key policy rates any more. Reduction in the cash reserve ratio was expected this time around, but by maintaining it at the present level of 6 per cent, the RBI has clearly preferred a wait-and-watch policy. India Inc is happy as high interest rates aren't good for the economy and eat into the profits of companies, reducing the surpluses. It's a cautious policy initiative aiming at the right balance between growth and inflation, while taking the economy again on a growth trajectory.
Srinivasan Umashankar, Nagpur (HBL)
