RBI policy: Cross over...but by feeling the stones

Now that the budget has given a boost to consumption and growth, monetary policy-easing can afford to wait. Given how various risks are evolving, it's best to proceed with caution

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Now that the budget for 2025-26 is done, if not entirely dusted, all eyes turn to Mint Street for the multiple-day meeting of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC). It will be the rate-setting panel's first under the chairmanship of RBI Governor Sanjay Malhotra. It comes amid speculation that the budget's consumption push will get another boost through monetary easing.

Monetary and fiscal policy, it is said, are joined at the hip. There are two ways of interpreting this. The first is that one blindly follows the other. The other is that each takes its cue from the other. The nuance here is that it is informed, but not driven, by the other. Of course, there could be a crisis, like covid, when both must work in close coordination to rescue a cratering economy. But when it's business as usual, each must stay true to its own mandate.