•So they’ve got a lot of bullets left in that gun?

Yes, they do and that’s part of a conscious strategy.

•So this is significant. You say they have a lot of headroom?

Absolutely, they have headroom.

•So it’s not like the US Fed. Where do they go now from 1% ... .5%?

No, no, we’re very far from that. You know, Olivier Blanchard, who is the Chief Economist of the IMF, was visiting two days ago, and I saw a news report of something he said in Mumbai. And he said the Reserve Bank has room to further cut rates if it wants to.

•Should it want to?

I would say it should be very watchful to take whatever opportunities necessary to maintain the momentum of recovery. I think the dominant concern today should be that inflation is not going to be a problem for the next six months.

•In another six weeks I think it will be unprecedented in India’s history — you will have... you’ve never had inflation numbers like these.

Let me take a risk, I think that in another few weeks the inflation rate is likely to be below 4%

•I think we’re getting to below 4%.

I mean it’s getting there but I don’t think it’ll actually be there and I think that it is important that you know you don’t want negative growth in prices. If you get an impression that prices are going to keep falling, then people won’t spend. So I mean this is what in the rest of the world they are worried about — the threat of deflation. You don’t want deflation. I mean anything between 4 and 5% inflation..... I think you should be comfortable with and we’re definitely in that zone.

... contd.