There may or may not be room for a rate cut now, but it is best to allow the situation to stabilise until the next policy review.
Although the external situation continues to be uncertain and challenging, on the domestic front the general outlook is positive and growth remains steady. Prospects of a good monsoon are bright. The government is determined to follow the path of fiscal consolidation. A status quo by the Reserve Bank of India (RBI) is, therefore, along expected lines.
A major concern, however, is the rising level of non-performing loans of banks. Both the market regulator and the government are seized of the matter and are working to resolve the issue.
Also Read
Above all, this time the market is interested in knowing whether RBI Governor Raghuram Rajan will continue in his post after his term ends in September. This indicates the level of credibility Rajan enjoys in the market. I don't think Prime Minister Narendra Modi will let Rajan go; rather he will utilise Rajan's services to strengthen the fundamentals of economy, the rupee liquidity framework, ease associated complexities and restore the health of banks.
Srinivasan Umashankar, Nagpur
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number
