The Reserve Bank of India is presently facing the challenges of managing high inflation and need for supporting the growth levers. It has taken the economy well through the phases of 'managing crisis' to 'managing recovery'. Now, the focus has shifted to 'managing inflation'. The policy stance of RBI truly reflects these emerging concerns. In this backdrop, RBI has hiked the policy rates and cash reserve ratio by 25 basis points each. This is a balanced approach to support large government borrowing as well as revival in private consumption demand. There is a need to bring back the economy to the high growth path of pre-crisis years. Given a good policy environment, the private sector with the support of the government initiatives could channelise India's huge demographic dividend to the country's advantage and take it to the double-digit growth trajectory. In this process, some critical initiatives are required to overcome supply-side constraints of the economy, of which underdeveloped social and economic infrastructure is one. The measures announced in the policy for this sector including relaxed provisioning requirements of 15 per cent for unsecured sub-standard advances, treatment of infrastructure bonds in banks' books as HTM category and relaxation for investment in unlisted non-SLR bonds would help flow of funds to this sector. These measures will support infrastructure investment requirement of around $1 trillion over next five-seven years. The micro and small enterprises (MSE) sector assumes importance in the economy, owing to its employment potential and regional dispersal. This sector also mobilises capital from the lower-middle class sections to invest in productive economic activity. RBI's decision to extend collateral-free loans up to Rs10 lakh will be positive for this sector, benefiting large number of such enterprises.
The sector contributes close to 7 per cent of our GDP. Along with the MSE sector, current policy regime of the Centre focuses on an inclusive growth agenda. RBI has been in the forefront of this drive and created a conducive policy environment for the same. Taking this further, it is now proposed to deepen the process of financial inclusion through grass-root level rural co-operatives and permit banks to engage any individual as business correspondent, subject to banks' comfort level and their carrying out suitable due diligence. These measures will go a long way in fulfilling the objectives of inclusive growth agenda.
There are some measures announced related to financial market, signifying India's commitment towards building a world-class financial market. The policy openness is also reflected in proposal for discussion paper on presence of foreign banks and licensing of new banks.
Overall, the RBI policy complements the measures announced in the Union Budget for inclusive growth and infrastructure development. This will create an enabling environment for steady growth in medium term.
