The political risks of low interest rates are high in an election year

Since 1989, governments have risked that the benefits of higher economic growth will offset the costs of higher inflation

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) got it wrong last week in telling the RBI not to fiddle with the repo rate, which determines the price of money in the economy, commonly known as the interest rate. 

What will be the consequences of the decision of not raising interest rates for the ruling party? How many seats will this cost the BJP?

The recommendation means that banks can now access money from the RBI more cheaply than otherwise -- the variable reverse repo rope trick notwithstanding. This means they can also lend more