Hold it steady

Rate cut by RBI would not revive growth

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) meets on October 3 and 4. This meeting of the MPC takes place amidst considerable concern about the rate of economic growth of the Indian economy, which fell to 5.7 per cent year-on-year in the latest data print — capping six consecutive quarters of slowing growth. Many have expressed the opinion that an expansive monetary policy is the solution to the growth problem. The level of real interest rates, it is argued, is too high for investment and thus growth to recover. These arguments further point out that