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October 2, 2008

The fortnight’s burning question Should RBI signal an easier interest rate regime in the next credit policy? 
No. Ajay Shah, Senior Fellow, NIPFP
I think we are still not out of the woods. Even now, a full eight months after inflation assumed crisis proportions, our credit policy has not been able to tame it. I feel RBI should wait some more time before it begins to ease off on interest rates.

No. Subir Gokarn, Chief Economist, Standard & Poor’s Asia Pacific
There is a sense that RBI may want to wait for one more quarter before cutting interest rates. Despite showing early signs of falling, inflation is still way above the government’s comfort level of 5 per cent. The India growth story is still impressive and I expect RBI to stay neutral on the interest rate front this time.

Yes. Amit Mitra, Secretary General, FICCI
There is severe liquidity pressure on Indian companies. Then, due to the global financial crisis, the situation has become worse. As a result, they are finding it difficult to fund new projects. Central banks across the world are cutting interest rates to save their economies. In view of softening of commodity prices globally, I believe this is the right time for RBI to reduce interest rates.

Compiled by Manu Kaushik

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