The rebalancing act

Excess policy accommodation will affect growth

The Reserve Bank of India’s (RBI’s) new Report on Currency and Finance (RCF), released last week, presented a welcome analytical assessment of macroeconomic management with an indicative medium-term road map for policy intervention. Though the report does not represent the official view of the central bank, it deserves a careful reading by policymakers. Economists at the Department of Economic and Policy Research of the RBI have strongly advocated the rebalancing of both monetary and fiscal policy as the economy recovers from the pandemic-induced disruption. A delay could increase macroeconomic challenges. The RBI, for instance, responded aggressively in the initial phase