This refers to Anup Roy’s report, “Central bank moots Re intervention overseas” (February 11). It is heartening to see that media and analysts have started taking cognisance of the multiple ingredients of the bi-monthly policy review exercise the Reserve Bank of India (RBI) has been doing ritualistically as part of its mandated responsibility. Usually, the post-review debates hover around the repo rate and inflation. This change is a welcome by-product of the forced exit of Urjit Patel which made stakeholders think about the effectiveness of the RBI in taking forward economic reforms.
The 25 basis point reduction in the repo rate works out to just 4 per cent reduction in the rate. The banking system, at present, is availing of a negligible percentage of their resources from the RBI. The myth that the monetary policy committee has two teams representing the government and the RBI has also been broken this time, as one GOI nominee and one RBI deputy governor on the monetary policy committee did not go with the majority decision to cut rates. The RBI’s efforts to get external professional advice to improve its functioning should become a guidance for other supervisory and regulatory bodies in India.
G Warrier, Mumbai
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