Sinha flays Rajan's policy stance, demands 150 bps rate cut

Questioning RBI Governor Raghuram Rajan's monetary policy strategy, senior BJP leader Yashwant Sinha today pitched for 150 bps rate cut to wriggle out of the present growth sluggishness.
"Food inflation is down to under 5 per cent, Wholesale Price Index (WPI) is in the negative zone and the factory production numbers are also down. This is a classic case where a significant reduction in the policy rates should take place," Sinha said here late this evening addressing a function by consultancy Dun & Bradsheet.
Former Finance Minister Sinha said the RBI should go in for 150 basis points cut in the repo rate to 6 per cent rather than tiny two 0.25 per cent each cuts that Rajan effected earlier this year.

Saying he respects professionalism, Sinha added that "professionals aren't the preserve of the RBI alone" and competent officials in the Finance Ministry and the newly-created national planning body NITI Aayog should listen to their convictions and persuade the Governor to shift to being accommodative.
Sinha was apparently referring to Rajan keeping the policy rate unchanged earlier in April, despite a majority of seven external advisors to the RBI board favouring a cut of up to 0.5 per cent.
"When four people say let's cut the rates, why does one person say that I am on top of all and goes for a status quo? Is this professionalism?," Sinha quipped in remarks which come days after release of the minutes of a consultancy committee on monetary policy which said Rajan had overruled the majority opinion and held the rates steady at the April 2 policy announcement.

Without naming the Governor or the RBI, he also criticised ending of the loan recast process. Defending the loan restructuring process, which Sinha started as the finance minister, he said this process is needed as there are many cases where the viability of a borrower has turned around after getting a breathing space to service the loan.
Stating that interest rate cuts and loan recasts are necessary for improving the economic climate, Sinha said the government should act on both the fronts and people will not wait for "eternity" for a change in their outlook.