There is nothing wrong in RBI's approach and what RBI has done in its policy review is the most appropriate step taking into consideration the persistent and spiralling inflation. The consumer price index is very high and is in double digits and RBI has the real concern on inflationary front.Even the reduction of 0.25% in CRR though not strictly warranted,the RBI has been proved to be a little diplomatic in taking this measure.This will add to the liquidity and banks can lend extra and make up partially the loss of interest which they have been crying about because of CRR. The risks on inflation continues and the Govt's recent measures will only add to inflation.Fiscal deficit needs to be contained by improving efficiency in tax administration,avoiding the unproductive and wasteful expenditures,improving the investment climate by bringinging in administrative reforms,removing corruption at all levels and bringing back the black money from abroad.The RBI has taken the right step.
from: Dr.T.V.Gopalakrishnan
(This is in response to the editorial Worth the Gamble appeared in Business line dated 18/09/12)
