Is RBI right in cutting the interesr rate by 0.5%

Dr.T.V.Gopalakrishnan , Mumbai , says: The RBI's cutting interest rate is influenced more by market sentiments than economic fundamentals. It suits the market and satisfies the Govt. But purely from a Central bank's monetary point of view the action carries no conviction and cut could have been better avoided. A token cut of 0.25% would have satisfied the market. However, it is a very clear message for the Govt that it has to perform its role in taking appropriate action on the fiscal and administrative front to give a boost to the GDP growth or else will have to face the criticism from all corners. RBI has exonerated itself by its bold action though not fully justifiable based on the economic fundamentals.
18 Apr 2012, 1553 hrs IST
(This is in response to an opinion poll by the ET dated 17/04/12).

Import of Gold and high CAD

Dr.T.V.Gopalakrishnan , Mumbai , says: The high Current accout deficit can be attributed to several reasons which include the import of gold. The oil price hike,depreciation of rupee,poor inflow of external funds thanks to lack of confidence in the economy,decline in GDP growth etc have contributed to higher CAD and gold imports have added to the burden.The craze for gold can be contained and the gold holdings in the country need to be converted into productive assets to support GDP growth.Containment of gold imports will help to improve CAD but the economy has to perform well in terms of GDP growth, exports, inflation,and stable exchange rate.
12 Apr 2012, 1830 hrs IST
(This is in response to an opinion poll in ET dated 12/04/12 on import of Gold and high level of CAD. This comment appeared in Et dated 12/04/12).

Budget 2012-13 some simple suggestions.

The budget should aim to bring down fiscal deficit for which some simple solutions are to be attempted.Ensure that all transactions above Rs 5000 are made compulsory through Cheque or card payments. Keep a close watch on all real estate,commodity transactions and ensure that the Income tax returns provide columns to report all assets and liabilities on an year to year basis with proper explanation for variations. Make full use of Information technology to track all transactions in the economy above a cut off limit. Capture all economic activities under GDP. Ensure that all salary and wage payments including payments under NREGS are through bank accounts.and make financial and banking inclusion a reality. Several activities where huge payments are involved go unnticed and they need to be captured officially.Make accounting professionals accountable for manipulation and irregularities whereever they are employed either as auditors or accountants. Time management is missing in all spheres of economic activities and need to be closely monitored. Overrun costs and wastage alone can bring down the deficit to a considerable extent..Will the FM change the mindset of people lacking in commitment , sincerity and integrity through budget? The economy has all resources and its suffering is man made. The FM has to be very imaginative and practical in drawing the budget and make it a healthy and dependable one.There should be no scope for exploitation and manipulation of any kind.

Dr.T.V.Gopalakrishnan