Very Benign Monetary Policy( 8th Dec 2023) to add strength to Political Stability and Strong Policy reforms for Economic Growth.

This has reference to the monetary policy announcement made on the 8th December 2023.

Kudos to MPC and RBI for announcing  the bold Monetary policy very  conducive to the thinking of the Government, expectations of the market and well in tune with favourable macroeconomic factors particularly the robust GDP GROWTH witnessed at 7.6 % and benign inflationary conditions, though certain uncertainties continue to persist in and around the world . Keeping all the policy rates unchanged is a welcome measure at this critical stage of the economy where tightening of liquidity is a requirement in view of increase seen in fiscal expenditures and lending activities seen particularly to unsecured segments. Market exuberance though seen as a positive sign politically, cannot definitely be seen as a healthy sign from the economic and social sides of the economy . The financial system stability cannot be taken for granted as long as there are connected  and interconnected loans and risks of unsecured loans and NPAs exist for all sorts of reasons, particularly ineffective Governance. The build up Foreign exchange Reserves is a good sign but needs to be cautiously handled not only from the angle of exchange rate stability but inflation expectations. All said, the monetary policy announced has a positive side to the economy as it supports economic expansion and growth with possible price stability particularly when the scope for imported inflation is comparatively less. With some imaginative and very benign tax policy keeping in mind the suffering of middle class and lower class and fast widening inequality among different classes of people and meaningful and result oriented governance at all institutions both private and public sector, the management of the economy can bring in wonders to all segments and all round welfare for all people all around. The much needed Political stability is getting stronger with every passing day and successive elections, which itself adds a strong base to achieve economic growth , social welfare and enhanced equality and rapid technological advancement. The latest monetary policy adds strength to the Government to influence its own policies for further advancement of the economy keeping the immediate target of $5 trillion economy and reach further ambitious targets set for the long term. ie by 2047. The close coordination seen between the RBI and the Government in shaping out policies is something remarkable and perhaps unheard of in the history of RBI. Good going indeed both for the RBI and the Government and best for the people at large to benefit in the long run.

T V G Krishnan