Management guru Stephen Covey talked about three constants in life: change, choice and principles. You could well apply those to the Reserve Bank of India (RBI). In the mid-quarter review of monetary policy in March, the RBI changed its position on policy interest rates and cut the repo rate by 25 basis points. Choice for the central bank is about trade-offs. In this case, it’s the trade-off between it’s priorities of controlling inflation and managing the current account, and pushing economic growth. In his policy statement, RBI governor Duvvuri Subbarao put it best: low interest rates are a necessary but not sufficient condition for reviving economic growth. There is considerable pressure (and will continue to be) on the RBI to take stronger action to promote growth, now that the government has done its bit. But here is where principles count: giving up inflation control as a priority would be a violation of the RBI’s principles. Here, Subbarao has shown the courage to stand by them.
— Srikanth Srinivas (Business World)
No comments:
Post a Comment