Rate cuts and 'pliant' governors

Two successive rate cuts from the RBI in February and April were not an election gift to the government

Some comments are unwarranted, a reflection of naïve acumen and narrow understanding of the subject. One such comment is in the April 13 issue of The Economist magazine that goes like this: “The Indian government has replaced a capable central-bank chief with a pliant insider who has cut rates ahead of an election”. Such sweeping statements are oblivious of ground realities and are based on errant data. 

As we may be aware, the Reserve Bank of India (RBI) has cut rates successively in February and April. These last two rate cuts were undertaken against the backdrop of “pliant macroeconomic conditions” in