“RBI did the right thing by increasing the repo rate. This will complement the government's approach to contain inflation by reducing the excise duty on petrol and banning wheat and sugar exports. When monetary and fiscal policy works in tandem, like in this case, the impact on controlling inflation will be much faster. A tighter monetary policy will also help to prevent the value of the rupee from sliding further. India recently witnessed a widening trade deficit. Arresting the rupee value to fall further will have a positive impact on controlling India's trade deficit. Overall, it was expected to see a quantitative tightening, and I am glad that Mr Governor increased the repo rate by 50 basis points.”
Dr. Nilanjan Banik is a Professor of Economics and Finance at Mahindra University's School of Management. He holds a doctorate in economics from Utah State University in the United States and a master's degree in economics from the Delhi School of Economics in India. He is currently focusing on the spatial nexus of India's growth and development. Prof. Banik has worked on projects for the Geneva Network, the Australian Department of Foreign Affairs and Trade, Laffer Associates, the United States of America, the Ministry of Commerce, the Government of India, the Research and Information System for Developing Countries (R.I.S.), New Delhi, and the Indian Council for Research on International Economic Relations (ICRIER). Elsevier, Springer Verlag, Routledge, Hart Bloomsbury, Elsevier, and others have published his work in an edited volume. He has also written a book on Indian macroeconomics, which was published by Sage.
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