Mistaken and disappointing: Rajeev Talwar

The monetary policy is a little conservative. The finance minister has already appealed for some action on the rate front, given that the government has introduced reforms, food inflation is down and sufficient buffer stock of grain is available. We needed a cut in the rates. Bankers have also asked for a rate cut to strengthen their home loan portfolio and reduction in equated monthly instalments (EMIs) of home loan borrowers.

The Reserve Bank of India (RBI) has cut the cash reserve ratio to increase liquidity in the system. What is the problem with RBI? I think Rs 17,500 crore of fresh funds will add to inflation. If more money comes into the market, it will push up prices. Instead, lowering of rates will not push up inflation. It will only give a boost to sectors such as housing, automobiles and overall industry. A lowering of rates will not increase property prices; so much of stock is lying unoccupied. It will spur the housing segment in the country.

It (the policy) is a bit of a disappointment. RBI has said it is watching the situation closely. Let us hope that in the next policy announcement, RBI will announce some rate cut.

Rajeev Talwar
Executive Director, DLF