The Hindu Business Line : Deepen debt market

In the article "No point blaming the RBI" (Business Line, April 20), the authors have rightly argued that the RBI has limited scope for deploying other instruments.

But what the RBI can do is to prevail upon the Finance Ministry to deepen the debt market. Corporate paper is nearly absent in the debt market and there is crying need for it to be quickly implemented so that non-agricultural credit growth is met at rates the industry can service and credit growth in this segment is not mixed up with the rest of the market.

Similarly, expansion of currency notes in circulation, which is taking place year on year to support real estate expansion and phenomenal rate increases, is being ignored.

It is surprising that the RBI, as an institution that does not come under any direct influence of the Government, should turn a blind eye to this phenomenon.

It is necessary for the central bank to take a bold step in this regard and announce through its reports the damage that currency-based transactions inflict on its policies.

As long as the RBI continues to encourage such transactions, they will be blamed, and justifiably too.

V. Balakrishnan

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