RBI governor Raghuram Rajan’s decision to keep policy rates unchanged at the sixth bimonthly policy review on February 3 had the backing of a majority of members of the technical advisory committee, minutes of the committee meeting showed.
“Four of the seven external members recommended no change in the policy repo rate. The members opined that there was no noticeable change in the environment since the policy rate action of mid-January 2015,” the minutes said. Members were of the view that given that the Union Budget was due, any measure must wait for clarity on the government’s steps to boost output and fiscal consolidation.
However, three members had recommended a policy rate reduction. They were of the view that the fall in inflation was far higher than the glide path suggested by the RBI. Also, since lower credit growth was not compensated by increased issuance of commercial paper, they suggested that credit was being priced too high in relation to supply.
The committe’s seven external members include former RBI deputy governor YH Malegam, former chief economic advisor Arvind Virmani and academecians Shankar Acharya, Indira Rajaraman, Errol D’Souza, Ashima Goyal and Chetan Ghate.
