You are here: Home » Opinion » Letters
Business Standard

Letter to BS: Govt must take steps to resolve supply-side bottlenecks

Increasing the supply of credit and arresting the accumulation of bad assets is crucial to making the banking sector robust

Business Standard  |  New Delhi 

Reserve Bank of India | File Photo
Reserve Bank of India | File Photo

This refers to "Market sees a long pause from RBI as CPI hits 7.35%" (January 14). Since the 135 basis point cut in the repo rate is waiting for full transmission, any further cut would be worthless. The task of lifting the economy from the deep slowdown and to transform it into a $5trillion economy by 2024-25 needs fast growth in household savings to push investment. The current inflation is due mainly to the hike in the prices of food articles. The government must initiate corrective measures to resolve the supply-side bottlenecks for smooth flow of food products. It must not refrain from spending as envisaged in the Budget. Increasing the supply of credit and arresting the accumulation of bad assets is crucial to making the banking sector robust. Any push to the banks to reduce the lending rate will force them to cut the deposit rates and that would negatively impact resource mobilisation and ultimately the supply of credit.

VSK Pillai, Kottayam


can be mailed, faxed or e-mailed to:

The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg

New Delhi 110 002

Fax: (011) 23720201 ·

E-mail: letters@bsmail.in

All must have a postal address and telephone number

First Published: Tue, January 14 2020. 21:45 IST
RECOMMENDED FOR YOU