This refers to the editorial "A case for status quo" (September 26). Banks' credit growth, which is usually around three times the real gross domestic product growth, has taken a hit. While industry circles are expecting a cut in the key policy rate, it is also widely expected that Reserve Bank of India Governor Raghuram Rajan may not do so in the next round of the monetary review on September 30. He would prefer maintaining the status quo despite the fact that the level of inflation has eased.
Some issues that might dominate the scene now are geopolitical happenings that have a direct bearing on the economy, delayed arrival of the monsoon, supply-side constraints and the not-so-comfortable fiscal situation of the government. Rajan would rather wait for an opportune moment before cutting the rate and look for sustained growth in the long term.
Srinivasan Umashankar Nagpur
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