The softening of monetary policy stance is one such step which is the need of the hour as it will lead to a phase of consolidation and stability in the sagging economy and pave way to resume growth, said Mr. Jaipuria.
RBI has increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.75% to 8%. CRR has been kept unchanged at 4% of net demand and time liability (NDTL). The reverse repo rate under the LAF stands adjusted at 7%, and the marginal standing facility (MSF) rate and the Bank Rate at 9%.
The cost of reducing inflation has been very high for the Indian economy and hawkish monetary policy has not been able to tackle inflation reasonably well, in turn retarding economic growth by making borrowing dearer each day, said Mr. Jaipuria.
Inflation in India can be tackled only by easing supply side constraints and improving infrastructure at a rapid pace, which can lead to an overall development in the economy, going forward, added Mr. Jaipuria.
Going ahead, the government must enhance public investments in infrastructure sector especially the agriculture infrastructure in terms of supply side infrastructure i.e. farm gate to consumer doorstep supply chain management, which could effectively tackle the challenge of inflation.
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