RBI and government fighting the symptoms, not the disease

Clearly, the Reserve Bank of India (RBI) did not learn from the errors that it made last week, when it capped the daily borrowing by banks from its "repo window", or the liquidity adjustment fund as it is formally known, to Rs 75,000 crore - about one per cent of all deposits. It also raised the interest rate on the marginal standing facility, and announced a sale of government securities.

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