ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Infl ation Traded In

The Reserve Bank of India's monetary policy for 2012-13 has had to be framed at a time when the economy is facing multiple risks - infl ation at an elevated level, a deterioration in the external sector and fi scal laxity. The RBI's aggression in cutting the repo rate by 50 bps is therefore inexplicable. The posture taken by the RBI is fraught with the risk of fuelling infl ation rather than propelling growth, meeting government borrowing at a lower cost rather than providing a fi llip to investment demand and of exacerbating the weaknesses surfacing in the external sector.

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