Monetary policy changes - FM is not happy with RBI on recent monetary policy announcements

[SURYANARAYAN MOHAPATRA]

Dear Students,

You must  have noted the recent changes in monetary policy announced by RBI.

FM  is not happy with RBI on recent monetary policy  announcements. Why ?

Finance ministry feels repo rate should be reduced to fuel  growth.

But RBI governor D Subbarao asserted the central bank’s independence   by keeping interest rates unchanged (he has only reduced CRR  to 4.25% of NDL but kept Repo rate unchanged), provoking unusually direct expressions of disappointment from finance minister P Chidambaram who expected RBI  to announce cut in  repo rate for  growth.

RBI does not agree with Govt on many issues.

The RBIs refusal to ease monetary policy despite North Block’s(Govt. of India’s) prodding under former finance minister Mukherjee and currently  Chidambaram did little to ease the tension.

After years of fiscal discipline, fiscal deficit has  rose to 5.8% in 2011-12 against the budgeted 5.1%,forcing the RBI to make fiscal consolidation a precondition for any monetary easing. Finance ministry issuing directions to PSU banks has not gone down well with RBI. It also has issues with the proposal to create an independent debt management office, while the finance ministry feels the RBI could issue new licences faster. The visible differences over the monetary policy have brought back memories of the strains that were visible between Govt and RBI during the YV Reddy era as Governor of  RBI.

With best wishes.

Prof.  Surya Mohapatra

[SURYANARAYAN MOHAPATRA]

Dear  Students,


Pls  go through  the following caption -  tension between RBI & Ministry of Finance

(Economic Times, dated 01/11/2012).












With best wishes.


Surya narayan Mohapatra

9912638453

[SURYANARAYAN MOHAPATRA]

 

Dear Students,

   Please go through the attachment -  tension between FM and RBI.


With best wishes.

Prof.  Surya narayan Mohapatra


 

[Saurabh Shukla]

Thank You Sir

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[vikhyat rai]

Thank u sir

[Varun Malhotra]

thank u sir

[nivedita anand]

Thank you Sir!!

[jasmine nanda]

Thank you sir.....