The six-member Monetary Policy Committee (MPC) on Wednesday decided to keep key lending rate unchanged at 6 percent at the fifth Bi-Monthly Policy meet. Independent MPC Member Ravindra H Dholakia voted for 25 basis points cut, while the five other members were in favour of maintaining status quo.
The central bank continued to maintain its neutral stance. It said that the retail inflation had reached seven-month high in October and the RBI survey shows that inflation will firm up in the coming months.
The Reserve Bank has reduced the repo rate under the liquidity adjustment facility by 25 basis points from 6.25 percent to 6 percent in 2017.
Dholakia has disagreed with the other MPC members during four MPC meeting during 2017-18. He wanted RBI to cut the benchmark rate by 50 basis points in June to 5.75 percent citing downward trend in inflation, positive monsoon forecast and stable oil prices.
At the third bi-monthly policy meet, Dholakia once again pitched for a rate cut saying that MPC effect a 50 basis point cut rate without losing any more time as the Business Inflation Expectations Survey carried by the IIM Ahmedabad showed businesses expect their cost inflation to remain at 3 percent for the year ahead. Reserve Bank cut rates by 25 basis points in August to 6 percent.
The independent MPC member had again called for 25 basis points cut at the October meet mentioning that the Q1 GDP has slowed down significantly and that oil prices will remain stable for the medium term.
At the December 6 policy meeting also, Dholakia voted for 25 basis points cut in policy rate as the MPC decided to keep the rate unchanged.
Professor Ravindra Dholakia is an independent member of the Monetary Policy Committee appointed by the government and economics professor at the country’s top premier management institute, Indian Institute of Management Ahmedabad and visiting faculty at European Management Institute (ESCP-EAP). He has served on various government and central bank panels, which includes chairing a committee on Cost Saving and Resource Use Optimization in Air India. Dholakia was also a member of the Sixth Central Pay Commission and Expert Committee on Restructuring of the State Public Sector Units.Dholakia holds Ph.D. in Economics, M.S. University, Baroda and Post-Doctoral Fellow, University of Toronto.