......From a macroeconomic policy viewpoint, it is convenient to slur over hard policy options by forcing the RBI to reintroduce interest payment on CRR balances. It has taken the RBI the good part of 20 years to claw back the effectiveness of the CRR instrument. Many years ago, I had called the payment of interest on CRR balances as one of the mortal sins of central banking. Having expiated this sin after a 20-year battle of attrition, the Praetorian Guards of the RBI should ensure that it does not revert back to this mortal sin. The RBI would do well to recall the words of the Prophet Zarathushtra: “He who learns nothing from the past will be punished by the future”.
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