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Letter to BS: RBI alone will not be able drive economic recovery

Confidence-building measures from the government are essential to boost the sentiments of the investors

Business Standard 

rate cut

This refers to the editorial "Beyond the rate cut" (August 5). Corporates are resorting to lay-offs and turning risk-averse resulting in a low level of investment. This is creating a ripple effect in the economy. Incentivising private investors by lowering the taxes on corporates and high net worth individuals and making available cost-effective credit are paramount to motivate the entrepreneurs to continue investment. A repo rate cut in the ensuing Monetary Policy Committee meeting and action to transmit the same to the end beneficiaries to boost consumption and investment are critical to stimulating economic activities. The flow of credit to non-banking financial institutions needs to be stepped up to ensure uninterrupted delivery of credits from NBFCs to the small borrowers. Confidence-building measures from the government are essential to boost the sentiments of the investors. The risk-averse attitude of the foreign portfolio investors caused a sharp decline in the stock indices causing a significant reduction in the value of equities and finally the market capitalisation of the listed companies. The government and the banking regulator have to act swiftly to achieve the envisaged growth.

V S K Pillai, Kottayam


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First Published: Mon, August 05 2019. 21:57 IST
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