Experts

Monetary Policy Committee minutes released: Experts decode

Aug 17, 2017 09:20 AM IST

The minutes of the latest monetary policy meeting that voted for a rate cut are out. It shows that the Governor and most of the members of the committee are worried about growth. However, there is no hint of a near-term rate cut.

The minutes of the latest monetary policy meeting that voted for a rate cut are out. It shows that the Governor of Reserve Bank of India (RBI) and most of the members of the committee are worried about growth. However, there is no hint of a near-term rate cut.

Below are comments from experts:

Pronab Sen, Former Principal Adviser, Planning Commission

“I think the concern over growth, the fact that inflation will probably remain subdued, is unquestionable. The zeal issue is whether or not a rate cut is the appropriate response and the fundamental disagreement that went on between Ravi Dholakia and Michael Patra and that really the debate.

In one sense Ravi is right that if you are going to do a rate cut, do a big one, make it meaningful. This tokenism, I do not think works very well, but my personal views are closer to that of Michael Patra’s, which is that this may not be a time where rate cuts will have the side effect because at the end of the day you want the rate cuts to translate into larger lending, higher investments and a boost to the demand.”

Tanvee Gupta Jain, India Economist, UBS Investment Bank

“Our growth forecast on gross value added (GVA) basis we are actually at 6.9 percent already whereas Reserve Bank of India (RBI) has still maintained the forecast for FY18 at 7.3. So if you look at from the RBI’s perspective, the downside risk to growth has increased and the sluggish investment cycle is a big concern.

But if you look at our own gross domestic product (GDP) numbers, we are comfortable with 6.9 percent GVA growth for this year.”

Watch accompanying video for more details.

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