There is widespread demand from India Inc to reduce Bank Interest rates to give impetus to growth to enable them to get cheaper credit. Dr.Subba Rao has done well by not heeding to their demand and stood firm in not changing the Rates nor reducing the CRR in the last mid quarter review. He has also told in clear terms that he has to take care of the non vocal sections of the society who are facing severe difficulties to cope with the inflation.
There is muted silence on the part of India Inc and self styled economists of the business media and there is acceptance of no change in the first quarter review of the Credit Polocy to be announced by the RBI on July 31,2012.
The inflation has not abated and deficient rains portend further acceleration of inflation in the coming days.
So in order to give respite for the depositors to get a fair return and to avoid diversion of savings to invest in gold and real estate, RBI must raise interest rates to contain inflation