Balancing act amid challenging times: V R Iyer

The policy statement has provided a clear guidance that the recent assessment of growth-inflation dynamics provides little scope to RBI for further monetary expansion

The RBI's policy statement though has complemented the government's initiative on the fiscal consolidation front; it expects further commitment from the government. Unless efforts are made towards easing the supply bottlenecks, improving governance and stepping up public investment, monetary policy stances alone would not be sufficient in reviving growth.

It has also warned about policy reversals in case of worsening current account deficit scenario. RBI has shown concern over inflation, especially retail inflation, and has tried to maintain a fine balance between growth-inflation dynamics by not going overboard on cuts.

Today's statement, though has recognised the pressures on growth, it has provided a clear guidance that the recent assessment of growth-inflation dynamics provides little scope to RBI for further monetary expansion. It has given a clear guidance that it would intervene at appropriate times for actively managing liquidity for adequate monetary transmission.

V R Iyer
CMD, Bank of India