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Letters to the editor dated February 22, 2021
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Monetary policy strategy
This refers to ‘The changing face of monetary intervention’ (February 22). The change in the approach of MPC not to set interest rates based on CPI inflation but to make the objective hybrid to strike a balance between growth and inflation deviates from the fundamental concept of economic theory. To ensure low interest rate to facilitate smooth government borrowing of ₹12-lakh crore without considering other players will have its own impact on the economy. The first indication is the continued devolvement of long-term bonds (10 years and more) on primary dealers.
Letters to the editor dates February 8, 2021
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Challenges before RBI
This refers to ‘Limits to an accommodative monetary policy’ (February 8). Though the onus to control inflation rests with the RBI, there are many economic indicators which are in conflict to each other, which makes the task of the RBI a challenging one. With fiscal deficit estimated at 6.8 per cent of GDP and market borrowing budgeted at ₹12-lakh crore, interest rates need to be kept under control for the government’s borrowing programme to go smoothly.
Though the MPC had decided to pursue an accommodative policy, the policy measures indicate conflicting signals. On the one hand, through a calibrated increase in the CRR, liquidity is squeezed out of the system. And, on the other steps like relaxation in the MSF and in TLTRO facilities are seen as measures to further ease liquidity. The rise in 10-year paper yield post the MPC announcement proves the point. Hence, it is time for the governmen
Letters to the editor dated January 26, 2021
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Climate policy
The climate crisis has been crying for attention for long. The US has now rejoined the Paris Climate Change pact, and the UN has welcomed this move.
There are, however, a number of practical issues that need to be sorted out. As for the US, Biden and his team have a lot of tough tasks ahead as the whole climate policy execution process involves key sectors like oil and gas.
For instance, projects like Keystone Pipeline, for transporting fossil fuel from Canada to the US, has come under policy attack amid urgent climate strategies to stop global warming. Despite such challenges, Joe Biden seems serious about tackling the climate crisis.
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