Business: Ram Singh, an external member of the Monetary Policy Committee (MPC) of the Reserve Bank of India, believes that at this juncture, another cut in interest rates may increase the danger. There is no need for this at present. In an interview, Ram Singh said, the impact of monetary and fiscal measures is still continuing. That means banks and financial institutions are still giving the benefit of repo rate reduction in a phased manner.

Singh had voted in favor of maintaining status quo in policy rates on October 1. But, the stance was supported from liberal to neutral. He said, it is important to keep an eye on both nominal and real GDP growth, as both have different analytical objectives. Low levels of inflation are not good for businesses, he said, as it affects both investment and employment decisions. RBI has not cut the repo rate for the second consecutive time since August. In the October MPC meeting also, the policy rate was kept unchanged at 5.50 percent.

Economy got momentum due to monetary interventions
Ram Singh said, the effect of the increase in demand due to one percent cut in repo rates this year has not been fully revealed yet. In such a situation, another cut in interest rates would be excessive. Also, this may pose a threat to the economy. The economy has been boosted by several monetary interventions to boost demand and credit growth in the first two quarters of this fiscal year.

Impact of GST relief visible on investment demand
The external member of the MPC said, several indicators show that after the concession on the income tax front in the Budget, measures like relief in GST rates are now having the desired impact on demand and private investment. Since the policy measures already implemented are proving effective, there is no immediate need for further cuts in policy rates. We must let the existing measures work into the system. Meanwhile, it is expected that there will be better clarity on the higher US tariffs front as well.