Assumption of rate cut delivering growth simply not working: Rathin Roy

Rathin Roy expresses concern on the collateral free lending scheme as not making the cut from a regulations perspective.

The assumption that rate cuts would help deliver growth is "simply not working" as transmission is not happening, said senior economist Rathin Roy on Saturday.

Roy, director of National Institute of Public Finance and Policy (NIPFP) said the assumptions on linear relationships between rate cuts resulting in growth by lowering the cost of capital is not working for some time now. NIPFP is backed by the finance ministry.

"I am not persuaded by the RBI's monetary policy statements, including that of the governor, regarding the rush down for these rate cuts. I heard him (Governor) just before this session and I continue to