Mid Year Review of Monetary Policy 2012

Overview of Mid year review of Monetary Policy


Just now, some time back Finance Minister prepared a road map for fiscal consolidation based on the Kelkar Committee report which gave its opinion on road map for fiscal consolidation .Fiscal consolidation is very important because India’s fiscal deficit, the excess of government expenditure over receipts, is forecasted to expand to 6.1% of GDP, higher than the budget estimate of 5.1%.  High fiscal deficit can be problematic for many reasons. But it seems that the government and Reserve bank of India both are not working in the same direction and being more precise not walking on the same path also. It is true that  RBI has lowered the Cash Reserve Ratio (CRR),  by 0.25 basis point ,but  it did not cut interest rates in view on persistent inflationary pressures. The Repo rate , Reverse Repo rate and bank rate are retained at same 8%, 7% and 9%,  when people from Government and Market  are expecting some changes.WPI inflation stood at 7.81 per cent in September, much above the RBI’s comfort level of 4-4.5 per cent. RBI could have taken some steps to control Inflation pressure which will help people and Government.


Author: Parveen Kaswan (Profile)



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