Indian economy still growing below its potential, says Jayanth R Varma

Varma says if the economy is not overheating, there is no need of a high real interest rate, which can choke growth

The average growth rate of the Indian economy, which is 4.25 per cent from the pre-pandemic period, is inadequate, given the potential, says Jayanth R Varma, member of the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC). In an email interview with Manojit Saha, he says if the economy is not overheating, there is no need of a high real interest rate, which can choke growth. Edited excerpts:

You voted for a 25 basis points (bps) rate cut along with a change of stance to neutral. Why do you think it is not premature to start cutting the policy repo