Stance of silence

The Reserve Bank of India, in its mid-quarter policy review, has unambiguously signalled a shifting of stance. Not only does the RBI reiterate in its statement that “further rake hikes may not be warranted”, but it concludes by saying that “from this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth”. This is a welcome recognition from India's monetary authority of grim reality. There is little doubt that a tight money policy — which continued even as domestic policy making froze and the external environment turned the most uncertain it had been since the financial crisis of 2008 — has caused the India growth story to come to a screeching halt.

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