While the Reserve Bank’s Monetary Policy Committee (MPC) in a review earlier this month upheld the accommodative stance and kept key policy rates unchanged, Jayant R Verma, a member of the MPC, argued strongly for a policy tightening. That inflation and growth risks are “beyond the control” of the MPC.
According to the minutes of the MPC meeting held on October 8, Verma, professor at IIM Ahmedabad, said in the policy review, “A pattern of slow policy making guided by an excessive desire to avoid surprises is no longer appropriate. ” .
“Since August, I have become concerned about two other risks that have become prominent globally in recent weeks. The first is that the worldwide transition to green energy has led to a similar trend in the 1970s. Energy price has created a significant risk of creating a series of shocks. This means that the upside risk to long-term inflation and inflation expectations is now heightened,” Verma said while proposing a hike in the reverse repo rate. Said happened.
“I am not in favor of the decision to keep the reverse repo rate at 3.35 per cent, and vote against it”
Liberal stand,” Verma said.
According to RBI Governor Shaktikanta Das, going forward, if there is no unseasonal rains, food inflation is likely to record significant moderation in the immediate period, due to record kharif production, more than adequate food stocks, supply side measures and favorable base effect.
“It is felt that sustained monetary support is necessary as the process of economic recovery is still delicately poised and the roots of growth are yet to be strengthened,” Das said.
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