3 min read.Updated: 31 May 2015, 11:23 PM ISTLivemint
Greater credit availability will not lead to a rise in investment growth
If inflation was the only criterion for deciding on a policy rate cut, this is probably a good time for the Reserve Bank of India (RBI) to go for one. Inflation, as measured by the consumer price index (CPI), stood at 4.87% (year-on-year) in April. When measured by the gross domestic product (GDP) deflator, it rose by a mere 0.2% in the March quarter. Based on the trend of inflation, there couldn’t be a more clear reason to cut rates. This has emboldened a number of private sector economists to predict (or even demand) a rate cut anywhere between 25 to 50 basis points (bps) by the central bank on Tuesday.