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

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Entering a Low Interest Rate Regime

The economy has entered a low interest rate regime with the latest monetary and credit policy statement of the RBI. While a favourable economic policy environment has made this possible, issues concerning the external sources of liquidity and sluggish investment and growth have not received the attention they deserved. If cognisance had been taken of them, the RBI's policy response may have been different.

Credit Policy Statement

With the RBI governor’s latest statement on monetary and credit policy for 200102, the Indian economy has undoubtedly entered a comparatively low interest rate regime. This has happened without any significant reduction in the fiscal deficit and government’s borrowing requirements. The gross fiscal deficits of the central and state governments together, which have hovered around 7 to 8 per cent for some years, have again touched 9 to 10 per cent now. 

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