RBI advisors had sought policy shift towards investment promotion: report
17 Feb 2012
The Technical Advisory Committee (TAC), a joint panel of experts consisting of RBI governor, deputy governors and external experts, at its meeting last month, had expressed concern over the sharp slowdown of investment activity, even as the central bank continued its tight money policy, a press release issued by the RBI showed.
Some members also felt the RBI and the government should now look at reversing the slowdown of investment activity rather than keeping on fighting inflation.
The slowdown would impact the economic growth of the country in the coming fiscal as well, they pointed out. And, going forward, this would also stoke inflationary pressures in the coming years as output falls, according to them.
Hence, they pointed out the policy focus of the RBI should be on reversing the slowdown in investment rather than managing inflation.
While high interest rates had impacted investment, the overall investment sentiment continued to be subdued because of the structural and confidence issues that had not been addressed, they felt.
Reviewing the domestic macroeconomic situation, members felt that the economy was clearly slowing down. They expressed worry, in particular, at the sharp slowdown of investment activity.
