An analysis of monetary policy rates prevailing during the UPA-II and the NDA governments shows that the RBI under the former was more conservative in rate cuts while the present government has been flexible in its attempt to push growth.
The UPA-II is seen to have been more focused on curbing inflation, on the other hand, there seems to have been a paradigm shift under NDA's watch, particularly after the appointment of Shaktikanta Das as the apex bank's chief.
Under Das, the RBI policy has seen a more flamboyant approach towards policy rates with cuts being effected for sustaining the growth momentum.
"In the NDA regime post-May 2014, repo rate cuts of 200 bps were done till May 2018 in response to monetary easing policies. The decisions were followed up by all Central banks. The measures were meant to boost domestic growth," said Deepak Jasani of HDFC Securities.
"Later, the rates rose 50 bps and cut again by 50 bps as on Thursday in response to the emerging domestic growth, inflation and global interest rates trends," said Jasani.
He said the repo rate cuts of 425 basis points to 4.75 per cent were done during the tenure of the UPA government between August 2008 to February 2010 as a reaction to the slowdown fears on account of Lehman Bros episode.
The later years of UPA-II were marked by high oil prices and high inflation rates providing little room for rate cuts. Even in times where a larger market expectation of rate cut emerged, the then RBI Governor gave importance to inflation targeting.
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"Later once things started to stabilise, the rates were upped once again to 8.5 per cent by March 2012," Jasani added.
--IANS
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