High real interest rates have hurt economic growth | The Indian Express

High real interest rates have hurt economic growth | The Indian Express

Written by Surjit S Bhalla |Updated: August 10, 2019 4:42:28 pm

The writer is Contributing Editor at The Indian Express, and Consulting Editor at Network 18

High real interest rates have hurt economic growth

Is India as different as claimed by “experts”? My own experience, and interpretation, is that India is very different because the experts (perhaps including those at the central bank) look at monetary policy very differently.

On August 7, the RBI/MPC reduced the repo rate by 35 bp to 5.4 per cent.

This time, MP does not mean Member of Parliament, but monetary policy. What I want to discuss today is the fog surrounding monetary policy in India. It used to be the case, around the world, that a deliberate fog was created around central bank speak. That changed post the 2008 financial crisis. Central banks around the world went for the three Cs — clarity and consistency in communication. To a C, all advanced country central banks go for the 3Cs. Among emerging economies I do not know, but what I hear foreign investors say is the developing world is much closer to the advanced economies than to India.