InvestorQ : Can we say that the RBI has now given up on boosting growth and will not try any measures to boost GDP or IIP growth?
NISHA Nayak made post

Can we say that the RBI has now given up on boosting growth and will not try any measures to boost GDP or IIP growth?

Answer
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7 months ago


That is not correct to say that RBI will not attempt to boost growth. It is just that the RBI is seeing the limitations of monetary policy as an instrument of boosting growth. For example, the unanimous in the recent minutes of the MPC appears to be that it would be better to wait out the impact of fiscal measures like company tax cuts, budget sops for lower income groups and the big infrastructure spending splash that is planned. The NCAER has pegged growth for fiscal 2019-20 at 4.9% and for 2020-21 at 5.6%. Clearly, the recent China virus syndrome has only made the policy makers more pessimistic. For now, it will only be fiscal formula for growth and RBI may not attempt to push growth with rate cuts. That is for now. Maybe in future you may again see RBI also cutting rates.