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Quick Edit | Time to plan for exit

Quick Edit | Time to plan for exit
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First Published: Fri, Sep 18 2009. 11 46 PM IST
Updated: Fri, Sep 18 2009. 11 46 PM IST
If there was a time to plan and execute an exit strategy from the ongoing monetary and fiscal excesses, it is now.
One reason for doing so is the return of inflationary pressure. On Friday, Reserve Bank of India (RBI) deputy governor K.C. Chakrabarty said that by March next year, WPI (Wholesale Price Index) inflation may touch 6%, two percentage points above the projection made in the annual policy statement by RBI in April.
Finding an exit may not be easy. The government is in no mood to curb expenditure. As a result, the burden of exit on monetary measures is ruthlessly heavy. While there is no doubt that credit supply has improved greatly from the difficult days of last year, any hardening of interest rates carries the danger of reducing credit flow again. Providing liquidity and taming inflation at the same time was the first challenge that RBI governor D. Subbarao had highlighted in July. That challenge is here.
The Union government is not helping manage this situation. It is time it moves on from symbolism on the subject to some substantive action.
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First Published: Fri, Sep 18 2009. 11 46 PM IST