Reddy on record

Market Measures

 What has been achieved is that the skills, the instrumentalities, the institutional set-up have been put in place which should allow interest rate to be an effective instrument in the medium term.  If you are implying that there are limits to the effectiveness of interest rate policy in the context of economic growth, yes, most certainly there are.  I don't think we are looking at interest rates to solve all our problems. The way we are going, the effort is to make the interest rate regime more flexible and responsive to the economic fundamentals and make it a better instrument.  Today, it is far from that. But it is important to recognise that an inappropriate interest rate policy can cause serious damage to the system.  We have moved from a regimented to a more flexible system. In the present set-up, it is not as effective as it could be in a more deregulated environment