RBI’s balancing act

The article on policy rates threw light on rate tweaking done by major economies.

Comparatively RBI appears to have done a good job balancing interests of economy and common man. The RBI has not hiked the rate since December 2022 and still managed to keep inflation from going out of hand. Because of elections, rate cut is unlikely in April but post elections, rate cuts are likely.

About transmission of rate cuts to lending rates to borrowers by banks, banks hike lending rates instantly when RBI hikes repo rate but similar alacrity is missing when RBI cuts rates, though banks call it “floating rates”.

RBI too appears to have looked the other way when this happens.

Hemanth Bhide


Rating base rates

This refers to the article ‘Gearing up for interest rate cuts in 2024’ (March 27). There is substance in the argument that “it will be difficult for RBI to decouple itself from global winds”.

But in recent years, depending on domestic compulsions, the RBI and the Centre have not hesitated to take positions different from the developed nations. This was possible because of the synchronisation of fiscal and monetary policies which happened during the pandemic.

The change in the policy environment was more visible when media and analysts speculated on the consequences of inflation remaining higher than the mandated band of 4-6 per cent.

MG Warrier


Digital farmers

Apropos ‘Silent digital transformation of farmer collectives’ (March 27). Indeed Open Network for Digital Commerce can be efficiently used by the Farmers Producing Organisations for diffusing information on agro products, their prices, value added, details of logistic facilities, terms of payment and after sales service.

This creates a nationwide digital agro market facilitating farmers to advertise their products and get fair prices. Consumers can get information on a wide range of agro products and buy products from a wide range of farmer’s groups with low logistics costs.

NR Nagarajan


Note ban impact

The article ‘Demonetisation: A stress test for the economy’ (March 27) aptly analyses the hits and misses of two phases of Demonetisation in 2016 and 2023. While the first phase of demonetizing ₹500 and ₹1000 currency notes was a sudden shock, the second phase of demonetizing ₹2,000 currency notes under clean note policy was smooth and had a longer span of implementation.

Under Income Tax Department scrutiny, about three lakh shell companies involved in money laundering were de-registered. The revenue collection jumped 18-20 per cent annually and tax base widened and deepened at around 10 crore.

The Demo 1.0 gave initial pain to people but the digitisation of economy owes its success to it.

So far the undisclosed business activities of the manufacturing, trading and service sector swiftly moved into the accounted tax base through GSTN and Income taxation.

Black money despite the low tax regime in the country is the bane of the economy and needs to be surgically removed when diagnosed at the initial stages.

Vinod Johri

New Delhi