After a long period of lull, economic growth is back on track. And yet, compared to global standards, interest rates in India are still quite high. Hence we still have a long way to go before embarking on a high-growth mode.
Inflation might be at a comfortable level now, but new and emerging issues are likely to hold the attention of Reserve Bank of India Governor Raghuram Rajan for long. These issues have the potential to cause upside risks to inflation.
But if Rajan's past actions, in particular his surprise move to cut key policy rates by 50 basis points, are any indication, it is obvious that he will prefer to maintain status quo this time around, wait for conditions to stabilise further and borrow time to understand what the US Federal Reserve will do, which will also have implications for India.
Srinivasan Umashankar, Nagpur
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