Likely to lose 1% of GDP growth in FY25, FY26 due to rate-cut delay: Varma

The only available yardstick for evaluating the tightness of monetary policy is the real interest rate. The nominal repo rate is useless for this purpose

Jayanth Varma, an external member of the Reserve Bank of India’s Monetary Policy Committee (MPC), has been voting for an interest rate cut since the February 2024 review meeting. Varma, in an e-mail interview with Manojit Saha, says a delay in the rate cut has resulted in growth sacrifice, and such losses for one more year would be unfortunate. The August meeting was the last one for external members who have a fixed four-year tenure.

In the minutes, you said that multiple policy measures during the last few years boosted the potential growth rate of the Indian