High time RBI turned to prop up growth: HDFC Bank, Axis

While monetary policy needs to focus both on inflation and growth, given the recent fiscal measures, the leaning of RBI policy needs to target growth right now, feels top executives of HDFC Bank and Axis Bank


Mumbai: The Reserve Bank of India (RBI) should cut interest rate in its forthcoming monetary policy review to check India's growth slipping below 5%, reports PTI quoting top private bankers Aditya Puri of HDFC Bank and Shikha Sharma of Axis Bank.

"RBI could give a signal because you don't want growth to come below 5%," Puri, HDFC managing director, said at a banking awards function organised by CNBC TV18 late last evening.

Attributing the spike in September inflation - which many feel will hold back RBI from cutting rates - to diesel price hike, Puri said, "Yes, inflation has been high, but on that inflation, about 30 basis points is (due to) the fuel price increase, so (the actual number) is about 7.5%. I am hoping for the best."

Sharma, who is the managing director and chief executive of Axis Bank, said that after the fiscal reforms, which have a bearing on fiscal consolidation, the time has come for RBI to shift its focus towards growth now.

"While monetary policy needs to focus both on inflation and growth, given the recent fiscal measures, which are hopefully going take us towards a better situation on fiscal consolidation, I think the leaning of policy right now needs to be on growth," she said.

"We just can't afford to have growth being stopped below 5%. Therefore, I would see CRR cut by 50 basis points," she added.

All eyes are on RBI Governor D Subbarao who is to unveil the second quarter monetary policy on October 30. While there is growing optimism that he may walk with the government following the rash of reform measures in the past one month, the latest inflation numbers have poured cold water on any such hopes.

In September, the wholesale inflation index rose to 7.81%, a 10-month high, from 7.55% in the previous month. The industrial production numbers at 2.7% in August indicate that manufacturing activity has rebounded.

Given these contexts, many analysts believe that the Governor cannot but continue his anti-inflationary battle that has begun over three years ago.

Meanwhile, State Bank of India chairman Pratip Chaudhuri, who raised storm recently by demanding the scrapping of CRR or cash reserve ratio, said the RBI should also focus on employment data as is being done by other countries.

"I think in their policymaking, they should also take into account the employment numbers because now so many other countries have taken. Every country takes very serious note of the employment numbers," he said.


Industry bodies seek specific steps, rate cuts from RBI

Industry bodies and exporters want the RBI to cut rates and also provide sector specific measures in the upcoming monetary policy review

Mumbai: Apart from rate cuts, the representatives of industry bodies and exporters' organisations that met the Reserve Bank of India (RBI) top brass have sought various sector-specific measures in the monetary policy review, reports PTI.
RBI Governor D Subbarao would announce the second quarter monetary policy on 30th October. While there is a growing optimism that he may go along with the government following the reforms rolled out in the past one month, the latest inflation numbers may act as spoilsport.
In September, the wholesale inflation index rose to 7.81%, a 10-month high from 7.55% in the previous month, but factory output numbers at 2.7% in August indicated that manufacturing had rebounded.
Many analysts believe the Governor cannot but continue his anti-inflationary battle.
"The issue is of sentiment. We wanted a stand to be taken by the RBI on the basis that interest rate do come down," Indian Merchants Chamber (IMC) head Niranjan Hiranandani told reporters, after the customary pre-policy meet.
Mahindra & Mahindra Group's Chief Financial Officer Bharat Doshi said rate cut will boost the sentiment.
Other associations asked for sector-specific measures, rather than a rate cut. SME Chamber of India asked for a special corporate debt restructuring (CDR) like dispensation for small businesses.
"We need a special mechanism like CDR so that our sickness can be handled separately," former PSU banker Ramnath Pradeep, who represented the chamber, said.
Another demand was to automatically restructure the debt of SME vendors supplying to larger corporates.
Because of the present difficulties, SMEs also want a revision in the NPA norms with a relaxation for about a year on the non-payment from the present 90 days, Pradeep said.
Federation of Indian Exporters' Association demanded more dollar credit for smaller exporters which will more than halve their interest outgoes, and a six-month relaxation on the realisation time to 18 months from the present 12 months, association president M Rafeeque Ahmed said.
It also asked the central bank to ensure than credit keeps flowing to the export sector and bankers do not keep away from lending, given the stress on the external front.
Ahmed claimed that RBI has agreed to form a committee to look into factoring demand of exporters.


Human development indicators: Need for a National Education Plan

While there is a spurt of institutions to cater to the “fast-food” approach of preparing students for job-oriented qualifications, there is a real dearth of efforts to support research and development of teaching skills in base subjects under science and humanities

Last year legislative measures were initiated for providing free and compulsory education for children in the 6-14 age groups. Union minister Kapil Sibal exhorted agencies and organizations, both in public and private sector concerned with education, to make joint efforts to realize the objective of the legislation that would make a difference in the lives of millions of children. After all, the noble intentions were clearly spelt out in our Constitution by its able authors.


Ensuring universal education, which alone can bring about a change in the quality of governance also, must at this stage graduate into a massive movement supported by political will, whole-hearted participation from all households, legislatures, local bodies and educational institutions, failing which, the present effort also will remain a restatement of noble intentions with no specific ground level results.


The Right to Education (RTE) Act, 2009, making free and compulsory education a fundamental right was notified on 27 August 2009 for general information and the relevant notification for enforcing the provisions of the Act with effect from 1 April 2010 was issued on 16 February 2010. It mandates that every child has a right to elementary education of satisfactory and equitable quality in a formal school which satisfies certain essential norms and standards. Considering the current pattern of school enrolment, it may be necessary to slightly modify the definition of the “target group” under the RTE Act to cover the age group of 3-18 from the present bracket of 6-14.


Literacy rate

Literacy rate varied across states. There were 11 states with literacy rate below the national average of 74% in 2011 (see Table). These states together accounted for 55.76% of the population (121 crore-provisional). Kerala, Lakshadweep and Mizoram had literacy rate above 90%. Himachal Pradesh, Chandigarh, Delhi, Sikkim, Nagaland, Tripura, Daman & Diu, Maharashtra, Tamil Nadu, Pondicherry and Andaman & Nicobar Islands had literacy rate between 80% and 90%. Literacy rate in the remaining nine states/UTs was above national average, but below 80%.
Mention need to be made also about the gender bias in promoting literacy. The Economic Survey 2011-12 dwelling on Saakshar Bharat (SB)/Adult Education had this to say:

“The literacy rate according to the 2001 Census was 64.83%, improving to 74.04% in 2011… While the literacy rate of males rose by 6.9% from 75.26% to 82.14%, it increased by 11.8% for females from 53.67% to 65.46%.”


Experience shows that higher literacy rate has a direct relationship with improvement in other human development indicators like poverty level, healthcare and even in governance. Considering this, the Government of India (GOI), mustering support from state governments and up to the level of gram panchayats, endeavour to ensure near 100% literacy across geographical regions, communities and income-stratas. In fact, Kerala has made headway in this direction long back and while the “Kerala model” may not be acceptable to the present dispensation in other fields, the methodology adopted by that state to move to near 100% literacy is worth emulating by other states. One simple method to ensure participation by all in adult literacy efforts was insisting on parents to write their names and sign leave requests of students in primary classes. It worked.


Higher education

While there is a spurt of institutions to cater to the “fast-food” approach of preparing students for job-oriented qualifications, there is a real dearth of efforts to support research and development of teaching skills in base subjects coming under science and humanities. The emergence of technology and science as preferred subjects for entering the job market with confidence has resulted in mostly ‘unskilled’ candidates pursuing subjects coming under the broad head of humanities.


One is tempted to fear that there are some vested interests like an interest in keeping unskilled labour cheap and still worse, showing higher percentage of children passing out of schools and joining colleges (such statistics would better the country’s position in international assessments!) which keep the drop-out level before Standard X alarmingly high. The targets for Gross Enrolment Rates at secondary level can be achieved with ease if pass out percentage at primary level is low!


As regards higher education, there is a felt need to have a comprehensive “Educational Plan” integrating the needs of various sectors and segments of economy and society. Lopsided priorities of the government and other stakeholders in the “business of education” and the field of higher education being left to the market forces without the necessary policy guidelines and absence of systems in place for self-regulation consistent with national priorities has resulted in non-availability of talent in various crucial technical and academic areas. No wonder, we are running short of experienced teachers in institutes of higher education, where talent combined with dedication and competence to deliver is most needed. The flow of people who can perform better to for-profit organizations has adversely impacted the capacity of educational institutions in India to deliver results. We have to start thinking beyond budgetary provisions and integrate public and private sector efforts in education to achieve the national priorities.


Last June, a World Bank study found out that newly hired engineering graduates were lacking skill sets. Though  the World Bank report was telling the obvious, such studies become relevant, as, beyond occasional announcements about doling out some money out of budgetary provisions for different disintegrated schemes to promote compartmentalized projects, we do not hear much about an “Educational Plan” integrating the needs of various sectors and segments of economy and society. This World Bank report reinforces the need for a comprehensive review of priorities of government in the field of education. The result of leaving the field to market forces is evident in the form of non-availability of talent even in the faculty positions, where talent combined with dedication and competence to deliver is most needed. The adverse impact of the imbalance at the top percolates down to the stage of deciding curricula and selection of candidates for various specializations/branches.


You may also like to read: Human Resources: Price of inequity


Irrespective of their educational background till graduation, aspiring youth with some analytical ability and ambition today try and transform themselves as managers, IT specialists or any such professionals leaving areas like civil service, teaching and government/public organizations to remain satisfied with the rejected seconds in the employment market. The position can be reversed only by having a National Education Plan which factors in, among other things, the following aspects

  1. The need for special skills in areas like IT
  2. Waste of developed skills, like in finance and IT sectors by recruitment of engineers for all types of work including those which can be performed by less qualified people. This has an impact also on the employment opportunities for less privileged class
  3. Skill development and career-orientation, say from Standard VIII, with the potential employment opportunities and aptitudes in view
  4. Unemployment level in various age/education groups in different regions
  5. Migration pattern of educated unemployed within the country and abroad
  6. Integrate public and private sector efforts in education.


For any effort in this direction to be effective, one will have to accept that market forces will not accept self-regulation and in the national interest, policy guidance should come from the government, to the extent necessary.

Other related issues

Market-related living wages will have to be paid to teachers and those in government and government-owned organizations. Public policy should protect public interest and measures to ensure this should not be interpreted as control.


Workers and service providers have earned a negative reputation for their attitude to customers and clientele. Here, workers’ education can play a significant role. State governments, through the departments concerned, local self-government authorities and willing non-governmental organisations, should take up workers’ education as a priority and bring about attitudinal changes in workers and service providers. The possible steps could be:


  • Periodic re-orientation programmes for workers who come into daily contact with consumers. This may include taxi/auto drivers, shop owners/sales-persons, bus conductors/drivers, hospital workers and so on. The advantages of being courteous and reasonable could be emphasized
  • Depending on the work area, lists of dos and don’ts could be publicized. Where feasible, principles guiding a model “code of conduct” could be displayed in the vehicle or shop floor
  • The consumer’s rights and duties and the forum available to the workers in case of discourteous behaviour by the consumer also should be widely publicized.


Creating awareness about right behaviour and conveying the message that following the right rules will be beneficial to one and all will go a long way in ensuring discipline at public places.


We have to start thinking beyond budgetary provisions and integrate public and private sector efforts in education to achieve the national priorities.


To read more articles by the same writer, click here.


(MG Warrier is a freelancer based in Mumbai. He can be contacted at




5 years ago

Table contains the names of states/UTs with literacy rate below national average of 74 per cent. West Bengal and some other states/UTs with literacy rate between 74 per cent and 80 per cent were not named.
Other contents of A BANERJEE's comment noted


5 years ago

It is strange that the great "changed"state of West Bengal does not find its place in the table above. The slogan is welcome, but not in that state where eithe the LCs under the Russian or the Chinese versions of Communist ideologies or, as at present, the current ruling partiey's dictats alone all policies are framed, including the ctate's court cases! There must be no discussion on the captioned subject as regards the state of Poschim Banga as neither human development nor natinal education nor the RTI even can ever have any relevance as long as there is enough exposure given to the common people on the responsibility of the "Centre" alone and its anti-state policies. Education is irrelevant as just below-matriculate-level-political elements have been declare by a very enlightened personality to be eminently suitable for being on the governing bodies of colleges! Education is a state subject, but imparting it that of the Centre vis-a-vis this state whose finances are the responsibility of the Centre too. A state populated (as it would appear now from the aforesaid VIP's learned statement) of mostly half-literates or "less educated"masses, there is no relevance of the expressions "human development" or education policy and the like indicators, given the state of its public health-related infrastructure and attitude, especially now that internatinal aid givers are reluctant to take care of any development of this state where the new government has scored (in a self-managed and closed circuit examination) 100 out of hundred in less than a year of its ascendance to power in all spheres of achievement. In a state entirely run on a "democratic"policy of one-person rule, these are great strides indeed. Hence, no, thanks-no central intervention is welcome in the areas covered in the caption of this article in at least this state being neglected by the Centre through oput its existence since the birth of a freee India! This state has alrady "arrived".

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine)