Scope for providing more monetary boost to growth, says MPC member

Ram Singh, director, Delhi School of Economics, and a member of the Reserve Bank of India’s (RBI's) Monetary Policy Committee, tells Manojit Saha a change instance to “accommodative” is desirable to suggest an increased likelihood of additional rate cuts in this easing cycle. Edited excerpts:

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You have voted for the “accommodative” stance. There isa view that arate cut can happen evenif the stance is “neutral”. So there is no need to change the stance. Whatis your view?

= [ think a change instance to “accommodative” is desirable to suggest an increased likelihood of additional rate cuts in this easing cycle. Such a signalling would add tothe sustainability of the growth momentum on multiple counts.

For one, it will give a further push to the transmission of the 100 basis-point policy rate cut, thereby strengthening the income and demand effects of the rate cuts. Besides, expectations of arate cut will likely put downward pressure on bond yields, thereby enhancing the appeal of the bond market to borrowers seeking to raise funds through market instruments. So, a change in stance has the potential to boost economic activities by intensifying and extending the current easing cycle.