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A brilliant policy stance

COMMENT: Rana Kapoor, CEO & MD, Yes Bank

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BS Repoter Mumbai
Last Updated : Jan 20 2013 | 12:46 AM IST

A brilliant policy entirely in line with YES Bank's expectations. The gradualist approach adopted by the Reserve Bank of India (RBI) in rate tightening augurs well to achieve a fine balance in anchoring inflationary expectations while not compromising growth prospects. The third round in the current tightening cycle marked by a measured hike in key policy rates by 25 basis points is a step towards further normalisation in domestic policy rates.

Through a measured hike in CRR, RBI has ensured availability of adequate liquidity for the productive sectors of the economy, thus maintaining the growth focus, and generating market confidence with a 5.5 per cent inflation projection for March 2011. The monetary policy action in line with YES Bank's expectations is well-crafted against the backdrop of divergent macroeconomic compulsions.

A sharp rise in policy rates has adversely affected the pace of capacity creation by increasing the cost of capital.

In terms of macro-aggregates, assuming a normal monsoon, I expect the growth momentum to continue gaining traction and expect real GDP to expand by 8.5 per cent in FY11, higher than 7.4 per cent estimated for FY10.

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First Published: Apr 21 2010 | 12:01 AM IST

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