Ahead of the first quarter monetary policy review on Tuesday next week, Reserve Bank of India Governor D. Subbarao, on Friday, had his customary meeting with Finance Minister P. Chidambaram, and also called on Prime Minister Manmohan Singh for discussions on the state of the economy at a time when neither bankers nor the industry is on the same page with the apex bank on the steps taken in recent days to check the rupee slide.
The meetings assume significance in view of the policy measures that are likely to be unveiled by the RBI chief on July 30 as the need of the hour is for calibrated steps to improve the liquidity situation, especially when the country’s lenders as well as the industry have been expressing unhappiness over the squeeze on availability of funds.
At the same time, the apex bank will have to ensure that excess availability of funds do not again lead to excessive speculation on the foreign exchange market which, in a large measure, has been responsible for the free fall of the rupee against the dollar.
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Although the strategy to suck out liquidity appears to be paying dividends, the RBI measures were viewed as extremely harsh even by bankers.