Challenging times ahead: Glenn Saldanha

The reduction will go a long way in boosting economic growth and will act as a stimulant for Indian firms to invest more on capex

The current turmoil in emerging markets and the volatile global economy added that extra bit of importance to the monetary policy review. Markets across the world, especially emerging ones, are in crisis with rising inflation and collapsing currencies. This backdrop also invariably points to the challenging times that lie ahead for the Indian economy. Under such circumstances, the RBI governor has done a commendable job by cutting the repo rate by 50 basis points taking into account a weak global environment, persisting slide in commodity prices and expectations of continuing sluggishness.

The reduction will go a long way in boosting economic growth and will act as a stimulant for companies to invest more on capital expenditure. The move is also likely to spur industrial activity, yet to gather steam despite our overall economy treading on the recovery path. And importantly, it will also help our country tide over the present gloom in global markets. As far as challenges before the RBI governor go, controlling inflation still must be on top of his agenda. So far, he has done a fair job in managing inflation, albeit low commodity prices.

However, moving forward in controlling inflation will be a challenge, as the base effect will come to play and the governor needs to be cautious of this fact. Another challenge in front of the RBI governor lies in managing the rupee vis-à-vis other emerging market currencies, which are depreciating. While doing this, he has to strike a balance so that Indian exports remain competitive.

Glenn Saldanha
Chairman & MD, Glenmark Pharmaceuticals Ltd