A tightrope walk by RBI.

(From Business Line)

SANS A REAL government in New Delhi with a set economic policy, the Reserve Bank of India has done its best by keeping unchanged the key indicative Bank and Repo Rates. On certain occasions, it may be best to be conservative. The RBI Governor, Dr Yaga Venugopal Reddy, does not see any crisis halting the economic momentum though it has marked down the GDP growth rate for the current year to 6.5-7 per cent against 8.1 per cent last year. It just could be that the central bank is unsure of the way the new government will go on reforms.

For the present, the enabling virtue of excess liquidity has kept market interest rates low. The corporate …