RBI’s Policy Options in the Current Context
(The following article appeared on CNBC TV18 online on May 06, 2019 https://www.cnbctv18.com/views/the-policy-options-before-rbi-in-the-current-context-3211271.htm ) RBI’s Policy Options in the Current Context In the wake of the current uneasy economic context, one frequently hears of the need for RBI to address high real rates and weak monetary transmission. Can RBI do anything to reduce borrowing costs now? And if they could, should they? The Economic Context Things aren’t looking great on the ground. There are indications of ongoing rural distress, including soft food prices since mid-2016. Sectors such as power, real estate, construction, airlines, telecom, infrastructure, manufacturing and exports continue to grapple with deep-seated, long-standing issues. More recently, India’s IIP growth has averaged just 1.1% the last four months. Car and two-wheeler sales are down 7.5% in Q1 2019. FMCG companies have reported tepid sales.