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Letter to BS: Highly naive to assume rate cuts will help arrest slowdown

Ironically, all that the RBI proposes, the government eventually disposes with some other obligations ranking high on its mind

Business Standard 

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With reference to “Review: Another rate-cut may not help Indian economy” (October 3), one tends to agree with the author's well-argued observations on this highly contentious matter even as the nation and the Reserve Bank of India (RBI) grapple with the challenges faced by the economy. It may be recalled that RBI Governor Shaktikanta Das had clearly stated that there’s enough room for a rate cut, especially when growth has slowed down. The government had also responded to the worrisome economic scenario with fiscal measures that are likely to stress its finances, including a big cut in the corporate income tax rate last month. Mind you, the latest GST collection data too has revealed a significant decline, which may add more fuel to the fire. No wonder the government has sought Rs 30,000 crore as 'interim' dividend from the RBI for the current financial year. Who knows the same may be used to bridge the widening fiscal gap.

Since the earlier RBI cuts haven’t yielded the desired results, it would be highly naive to count much on that this time. Ironically, all that the RBI proposes, the government eventually disposes with some other obligations ranking high on its mind.

Kumar Gupt, Panchkula


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First Published: Sun, October 06 2019. 21:07 IST
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