RBI’s changed stance

It is evident that the RBI has changed its stance to less accommodative in order to contain the inflation.

At a time when countries are beginning to revive from the pandemic blow, the conflict between Russia and Ukraine has led to the geopolitical tension worsening supply-side constraints further.

Having well understood the exogenous pressure, the RBI has lowered its prediction of GDP to 7.2 per cent from 7.8 per cent (predicted in the last MPC meeting) for 2022-23. The downward revision of GDP signifies the possible impact of “cost-push” inflation on aggregate demand and consequently shrinking the GDP.

It is imprudent being dovish (highly accommodative) beyond a point where prolonged inflation itself would be detrimental to economic growth especially when the upswing in the rate of inflation is not (proportionately) translated into or reflected in the prices of factor (such as wage, rent and interest).

The situation in Sri Lanka — where the people are experiencing the pain of inflation due to apathy of its government and the central bank — well serves as a case study.

S Lakshminarayanan

Ko-Puvanur (Cuddalore District)

RBI takes the right decision’

Apropos ‘RBI keeps repo rate unchanged at 4 per cent’ (April 8), the six-member Monetary Policy Committee (MPC) unanimously deciding to keep the repo rate unchanged at 4 per cent, was all but expected since the economic growth is barely above pre-pandemic level.

While the committee opted to keep the monetary policy stance accommodative while focussing on withdrawal of accommodation to keep inflation within target it may be significant to note that the RBI marked down its earlier real GDP growth projection for FY23 to 7.2 per cent from 7.8 per cent and raised retail inflation projection for FY23 to 5.7 per cent from the earlier 4.5 per cent, assuming crude oil price at $100 per barrel.

It is a different matter that all this came despite several key financial experts/economists strongly batting for hiking the repo rate to contain the extant inflationary tendencies prevailing in the Indian economy.

SK Gupta

New Delhi

The Lankan lesson

The current economic crisis in Sri Lanka should serve as a deterrent for countries that rely on the services sector as chief source of revenue.

The island-nation’s tourism was severely hit by the pandemic and also by the government’s experiment with farming techniques is a sign of poor governance.

The island-nation needs assistance from the IMF for at least a year to recover from this economic crisis.

There will be some hope if tourism picking up. The situation should improve in the future.

Vikram Sundaramurthy

Chennai

Improving road safety

With reference to ‘Road Ministry notifies mandatory automated test for vehicle fitness’ (April 8), the authorities’ sustained focus on road safety is welcome.

However, in addition to the focus on vehicles (like six airbags made mandatory recently), other areas too need more attention. Strong and sustained awareness campaigns for improving driver compliance to road rules, for one.

In spite of claims, the condition of many highways is dangerous.

It is not just about the main carriageway surface, but includes conditions like encroached/damaged shoulders/service roads/cut dividers, use by forbidden vehicles, damaged/illegible/confusing signages like different speed limits on the same stretch.

Road safety goes much beyond the vehicle and its features.

While the driver is a key actor, authorities could also consider improving governance and accountability.

V Vijaykumar

Pune