Your edit “RBI’s hard choice” (April 12) rightly emphasises that the time is not ripe for a rate cut. This counters the general euphoria in the financial markets that expect a rate cut — the first in three years. There is a small minority that holds a contrarian view and so Reserve Bank of India (RBI) governor must be under tremendous pressure to succumb to general expectations and announce a small 0.25 per cent cut in the rates, albeit grudgingly. However, the economy is not ready for this since inflation is still high and nowhere near the comfort zone. Moreover, there is no indication of oil prices softening. The latest Asian Development Bank report indicates that most Asian economies are similarly placed as India and are refraining from a rate cut for the time being. The growth-versus-inflation conundrum is likely to haunt RBI governor for sometime at least. It will be interesting to see how steadfastly he will defend his conviction.
S Ravindranath New Delhi
