The bimonthly policy review of RBI is a very clear message that the trust and understanding between the Government and RBI have been absent and RBI despite some of the benign economic fundamentals particularly inflation among other things , preferred to be conservative and keep its policy rates unchanged citing some reasons which cannot be challenged. This was an opportunity for RBI to give a psychological boost to the economy taking advantage of the so far favorable monsoon, fall in international oil prices, stability of the rupee and decline in the current account deficit thanks to fall in gold and oil prices and reduced import bill, and some of the positive steps already taken by the Government to improve ease of doing business and augment industrial production. The loss of opportunity and the time cannot be regained and the recurring consequences the economy is subjected to due to the mistrust and lack of coordination cannot be made up so easily is what the RBI and the Government need to realize and act upon.
Dr T V Gopalakrishnan
5/8/15.
( Letter sent to ET on Monetary Policy )
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