External members of the Monetary Policy Committee suggest reducing policy interest rates due to temporary food shocks and high real interest rates. However, caution is advised as markets are running ahead of policy makers and inflation history suggests challenges in bringing it down.
RBI economists, in a report released on Tuesday, rejected the IMF view that India’s debt-GDP ratio has the potential of shooting past 100 per cent if historical shocks materialise and hence the country needs to go cut government expenditure.
In an article in the RBI bulletin, the economists including RBI deputy governor Michael Patra said: “Our simulations reveal that the general government debt-GDP ratio swerves below the projected path set out by the IMF in its latest Article IV consultation report for India.”
In an article written in the latest RBI bulletin, deputy governor Michael Patra and a few other colleagues have roundly rejected the IMF’s view that if historical shocks materialise, India’s general government debt would exceed 100 per cent of GDP in the medium term