This refers to the editorial “Twisting the curve” (December 23). Despite the repo rate cut of 135 basis point to counter the cyclical problems, the economy is still not recording any positive result. The weak monetary policy transmission has proved unfavourable for the growth of investment in the private sector. Another rate cut and enforcing full transmission of the past rate cut are vital to lifting the economic sentiment to boost investment. The government must desist from the practice of borrowing at a higher rate because it is creating a higher interest rate scenario that is inhibiting the transmission of policy rate cuts.
The demand for credit and the credit absorption capacity of the various segments are critical to boosting the supply of credit. Therefore, at this juncture, structural reforms are just as importa nt as monetary policy measures. The stimulus packages to revive consumption are showing little result because of the lack of structural reforms in tandem with the monetary and fiscal reforms. Those should be the focus areas to achieve the economic goals.
VSK Pillai, Kottayam
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