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This refers to the monetary policy review announcement of the Reserve Bank of India deciding to retain the cash reserve ratio at 7.5 per cent, repo rate at 7.75 per cent and the reverse repo at 6 per cent (Business Line, January 30).

This decision intended to control inflation is no doubt welcome. But, to achieve the objective, one feels it is imperative that commercial banks use their liquidity to lend to sectors that have shorter gestation periods . Though the RBI’s thrust is going to be on the employment-intensive sectors, it is important that the loans create more entrepreneurs who produce goods rather than services to control inflation.

S. Ramakrishnasayee Ranipet

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