Letters to the Editor dated December 2, 2019

A further cut in the monetary policy rate is not the solution to boost investments and, thereby, lift the economy from the slump. That the 135 basis point cut in repo rate during the last nine months has not had any positive effect is evident from the GDP growth of 4.5 per cent recorded in the second quarter of financial 2019-20.

The government must find ways to drastically improve the revenues to bridge the growing fiscal deficit gap. It is essential to stick to the budgeted fiscal deficit without cutting the revenue and capital expenditures.

The banking sector has transmitted the repo cuts by cutting their lending across various loan products. Simultaneously, banks were left with no option than to cut the interest rates on the deposits which affected the mobilisation of resources.

In an investment-driven economy, the growth of household savings is crucial and, therefore, the deposits rate must be synced to food inflation.

The senior citizens’ deposits with banks are significant and since the former depends on the interest payouts for their needs, a reduction from the present level will be detrimental to their interests. In spite of that if the Monetary Policy Committee goes for a rate cut, the banks must look for alternatives such as curtailing the credit costs, other operating costs and reduce the cost of funds by drastically improving the share of low-cost deposits.

The stimulus packages are still to manifest the intended results and, as such, the government must review or revisit the measures in force and initiate corrective steps to accelerate growth and lift the economy from the slump.

A further cut in the repo must be avoided to propel the propensity to save and consume because both are vital to economic growth.

Kottayam

This is with reference to the editorial ‘Less than smart’ (December 2). The smart city mission, though launched with much enthusiasm by the government, hasn’t been up to the mark due to the slow execution of projects. The main reason for this is the lack of coordination among various government agencies involved in executing the projects. Further, the scheme is better understood only by the digitally literate. An awareness mission on smart city programmes is essential. The government must take effective steps to improve the coordination among the various stakeholders of smart city projects.

Sivakasi

Apropos ‘Speaking half-truth to power’ (December 2), industrialist Rahul Bajaj’s criticism of the Modi government at a public event was uncalled for. No doubt there’s an element of distrust among industrialists in the government, which has contributed to the prolonged slowdown.

However, one must understand that there’s a global slowdown and India is better off than many other countries. The manufacturing sector is the key driver of jobs and, hence, the government needs to encourage investments in this sector.

Anyway, to dispel the air of distrust in the government, the Prime Minister and the Finance Minister need to call for a meeting of leading industrialists and urge them to be positive and hopeful of better times.

Mumbai

This refers to ‘RBI seen cutting rate again to arrest falling growth’ (December 2). While there may be no unanimity over the likely quantum, the fact remains that the RBI’s repeated attempts (a cumulative 135 basis points cut since January this year) to ‘reverse’ the nation’s slackening growth trend have failed to achieve the desired results. The GDP has most worrisomely slumped to as low as 4.5 per cent in the September quarter, its slowest pace since 2013. The core sectors have also witnessed a sharp decline and the overall demand has nosedived.

The central bank’s policy of ‘inflation targeting’ ought to be ‘revisited’ since achieving national economic growth, in close coordination with the government and other stakeholders, assumes much greater importance now.

Bengaluru

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