RBI's balance of growth and inflation may be wrong

The Reserve Bank of India, in its first-quarter review of monetary policy, kept the benchmark policy rate constant at 8 per cent. The only change it made was to lower the statutory liquidity ratio for banks from 24 to 23 per cent; RBI Governor Duvvuri Subbarao said that he wanted to ensure that “liquidity pressures do not constrain the flow of credit to productive sectors of the economy.”

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