Return to normal

Higher liquidity is not helping the real economy

The Reserve Bank of India (RBI) has done well to start the policy normalisation process. As widely expected, the Monetary Policy Committee (MPC) decided to maintain the status quo on both the policy rate and stance last week. Since liquidity-related interventions are outside the purview of the rate-setting committee, the onus was on the RBI to take appropriate measures. Governor Shaktikanta Das in his statement, for instance, noted that the RBI was not a prisoner of any rulebook and did not hesitate in taking unconventional steps in order to keep the financial market functioning. To be fair, the central bank