I think India's policy that the openness of trade should be carried through a multilateral process is the right one.
Monetary policy transmission encompasses the whole continuum of interest rates; of course, the central bank only determines the overnight policy rate.
If very fundamental reforms take place, especially when it comes to factors of production like land, labour, then a higher growth rate is possible.
Enhanced transparency has helped to reinforce the stability of India's financial system.
Yes, 4% is the government-mandated target to the MPC. The plus/minus 2 percentage-point upper and lower bands are the tolerance levels specified by the government. If we breach those for three consecutive quarters, we need to inform the government of why that happened and what we propose to do to bring inflation within the two bands.
We have been mandated by the government, backed by legislation, that we have to have an inflation target of about 4%.
Large credit guarantees also impede optimal allocation of financial resources and increase moral hazard.
If one sees far, structural changes that come with temporary disruptions can be growth- and efficiency-augmenting in the medium to long term.
A well-functioning transmission should at some point go from the overnight right up to 40 years, and that is the ultimate objective in having monetary transmission that affects the whole gamut of borrowing tenure.
Government should eschew suasion and directives to banks on interest rates that run counter to monetary policy actions.
Growth is always there in the MPC's scheme of things; we don't lose sight of that, but not at the cost of inflation.
I think that is a very important milestone in our economic history that the monetary policy is now determined through a committee process where there are both independent committee members and representation from the RBI.
It is easy and quick to fritter away gains regarding macroeconomic stability.
People were holding high denomination notes to keep tax unaccounted for money. Some sectors like real estate were using cash to avoid tax.
The RBI is interacting with the banks every day.
The staff members of all banks have worked very hard, and we all owe them our gratitude.
This is a once in a lifetime event. It is very rare to remove 86% of the currency in circulation in one go. The logistics of such an operation are mammoth.
There is little room for complacency, and it is important to guard against sporadic volatility in financial markets.
One of the things that the public sector banks need to do is to raise private capital from the market and not rely on government largesse.
The materialisation of reforms in the form of rollout of the GST, the institution of Indian Insolvency and Bankruptcy Code, and the abolition of the Foreign Investment Promotion Board should boost investor and investment confidence.
