23rd April

Take the Cue

The article urges the banks to take the cue from the positive signals send by RBI by announcing the rate cut in repo rate and reverse repo rate by 25 basis points. It is only then the economic recovery is possible.

While RBI has been conservative on monetary policy in recent times, it claims that it has sent enough positive vibes in the market since October last year. But it has to keep its ammunitions dry since economic recovery hasn’t started yet although some of the sectors show some growth like auto, cement, steel and capital goods. Although RBI needs reserve power for future needs and the present rate cuts have struck the balance between present and the future. But gradualism in monetary policy leads to expectations of more rate cuts in the future and thus reluctant lending. What India needs presently is boosted consumption and investment. Government has two fold constraints because of poor fiscal situation as well as election code of conduct. Thus, it’s all on RBI to boost the growth and keep the engine running. But banks also need take some responsibility to boost demand especially from the urban middle-class. While blaming RBI for low credit growth, banks continue to sideline retail customers over government and big industry for lending. The conservatism for commercial interests is understandable but RBI has already created a platform for them to widen their lending base by cutting the rates six times in six months and thus decreasing their borrowing costs.

While ICICI has taken a cue from the RBI rate cuts, it is also the responsibility of other banks to do the same.

Desperate Tactics

The article talks about the desperate but unsuccessful attempts of Maoists to stall the election process but people of India hasn’t shaken from their trust in democracy and continue to exercise their right to vote.

While previously the Maoists used violence to scare the people on the day of election, this time they have done it a day before. Besides blowing up a railway station, they also hijacked a train in Jharkhand. This signals their desperation to seek attention and scare people away from polling booths. Despite killing 16 people in Chhattisgarh, Jharkhand, Bihar, Maharashtra and Orissa, large number of people exercised their vote in these states which clearly signals that they ignored the boycott. While Maoists’ attempt to keep the people off the election booths comes on their apparent disbelief in democracy, the public in India thinks otherwise. While no democracy or political system is perfect, it is, at the same time, the best possible option to solve the social and economic issues and improve the life quality. Elections are crucial to the democracy since it gives people a chance to elect their representative and participate in the nation-building process. 

While the poorest of the poorest in India knows the importance of the right to vote, Maoists themselves need to think the reason why people have ignored their repeated attempts to boycott the elections. At the same time security forces should also make sure that the elections go undisrupted.