Apropos Statsguru (July 23) and your editorial “Worries over growth” (July 26), I strongly believe the Reserve Bank of India should opt for a rate cut to improve confidence and growth — by spurring demand in non-core areas (other than food and fuel). The current tight monetary policy doesn’t seem to be helping reduce inflation since in India inflation is primarily driven by food and fuel, whose demand does not change much with price. India’s policy makers must realise that we live in a globalised world, where money flows across borders are significant, but movement of people looking for employment is still severely restricted. Therefore, those who have very little to fall back on have to depend on opportunities for employment within the country. Besides, excessively high rates do tend to distort money flows and encourage excessive speculation.
So what about inflation? For a start, we should allow foreign direct investment in multi-brand retail.
M Abraham Mathew Bangalore
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