RBI should have gone for a 100 bps rate cut: Former finance minister Yashwant Sinha

NEW DELHI: Former finance minister Yashwant Sinha has flayed RBI's monetary policy stance and pitched for a 100 bps rate cut to put the Indian economy on fast track. Speaking to ET Now, Sinha termed RBI governor Raghuram Rajan's 25 basis point cut as inadequate.

"It has no impact...the background which formed the basis of this rate cut was inadequate. I have nothing against the RBI using its monetary policy, but you can't imagine every adverse condition over 365 days and say these are the reasons why I'll not have rate cuts now," he said.

Sinha said the current RBI move sends very wrong signals for the economy.

The former finance minister said the RBI got it wrong on the monsoon. "The RBI was negative about it because it believed the predictions, now monsoons have made a turnaround," he told ET Now.

Last month, Sinha had pushed for a hefty 150 bps rate cut.

"Food inflation is down to under 5 per cent, wholesale price index is in the negative zone and the factory production numbers are also down. This is a classic case where a significant reduction in the policy rates should take place ... and the RBI should go in for 150 bps cut in the repo rate," he had said.

When sought reaction on the deficient monsoon forecast then and the resultant fall in the markets, he said markets are overreacting to the fear of drought.

With PTI inputs