Apropos the editorial, "Play it safe" (June 8), the Reserve Bank of India's (RBI) policy announcement was a non-event because Dalal Street and the Centre were as anxiously looking up at the skies for rain as Marathwada farmers.
Persistently unstable numbers - be it the Index of Industrial Production or inflation trade indices - point to a stressed economy. About 17 to 20 per cent of Indian bank loans are in jeopardy. Private sector fixed capital investment is down 22 per cent from FY12 level.
When the US Federal Reserve eases rates, increased dollar outflows would add to monetary worries. Crude prices may then upset fiscal equations. In all this, the climate for investment, essential for growth, will remain uncertain. The onus is on the government to fund fresh large-scale investments.
That the pay panel largesse can be leveraged for a spurt in demand to help neutralise overhangs of non-performing assets of banks is facile. The RBI estimates a surge of 150 basis points in inflation. This amount would be better allocated to investment. Fiscal prudence transcends every economic theory.
R Narayanan, Ghaziabad
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