With central banks worldwide increasing policy rates because of the global inflationary triggers, RBI’s move to raise the repo rate by 50 bps is par for the course. It is a reasonable approach and a more aggressive hike would have triggered economic instability. Predictably, the RBI has withdrawn its ‘accommodative’ stance and is moving cautiously. The Indian economy, although not immune to global shocks completely, has shown resilience and is predicted to continue doing so. While inflation is still a worry, there are positives in terms of robust rural demand, agricultural productivity and a stable manufacturing level. Clearly, where alarm bells are ringing for other economies, India can afford to wait and watch. The RBI, as the Governor said, has rightly adopted a strategy of being ‘wakeful, vigilant and striving’.”
