Looking beyond the rate cut

Credit guarantees from government, deficit financing by the RBI and an HTM hike for banks are the only solutions that can get the wheel of credit and investment rolling

Uncertain times call for the use of unconventional policy tools and the Reserve Bank of India (RBI), under Governor Shaktikanta Das, scores highly on these criteria. Tools like long-term repo operations, targeted long-term repo operations, special open market operations (OMOs), and refinancing facilities are now the cornerstone of the current policy regime. Expectations were building up on more such tools to be used by the RBI during the scheduled policy announcement, which was just two weeks away. While the policy action announced on Friday would be described by many as underwhelming, the timing took the market by surprise, leading to