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Two RBI MPC members oppose calibrated tightening stance, warn of hit to growth, capex

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Two RBI MPC members oppose calibrated tightening stance, warn of hit to growth, capex

Two RBI MPC members oppose calibrated tightening stance, warn of hit to growth, capex

While all six members of the Reserve Bank of India’s Monetary Policy Committee voted in favour of the 25 basis point repo rate hike announced on October 5, two members - Dr Nagesh Kumar and Professor Ram Singh, did not support the shift to calibrated tightening, warning that a tighter policy signal could hurt demand, interest-rate sensitive sectors, private investment and capex.

Two members of the Reserve Bank of India's Monetary Policy Committee opposed the central bank's shift to a calibrated tightening stance in October, even as they backed the 25-basis-point increase in the repo rate, citing risks to growth, demand and the private investment cycle . Dr. Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi and Professor Ram Singh, Director, Delhi School of Economics voted in favour of raising the policy repo rate to 5.50 per cent, but both wanted the monetary policy stance to remain neutral. The other four — Saugata Bhattacharya , Indranil Bhattacharyya, Poonam Gupta and Governor Sanjay Malhotra — backed the shift to calibrated tightening

Singh cautioned that a shift to a tightening stance could signal an extended cycle of rate hikes, potentially neutralising the benefits of growth-supportive monetary and fiscal policies in recent months. He said the current inflation pressures were primarily supply-side, driven by rising fuel, food and commodity prices, while classic signs of economic overheating such as a wage-price spiral, demand-driven capacity overstretch or abnormal growth in private consumption and capex were largely absent.


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