We all love the Indian GDP growth rate. RBI has revised its estimates from April 2006, by a full 1 percentage point, in the just released Monetary and Credit Policy Review. Those of us who are beneficiaries of the sharp increase in income, easy availability of bank loans, and ability to speculate about the Sensex, love this statistic. We care about what RBI does to interest rates only to the extent it impacts our deposit and loan rates. There is enough trivialising of economic debates, thanks to media explosion and the compulsion to take it to the ‘common man’. The debate about a growth rate that is ambitious has to be about its sustainability, not merely its level. If we put that GDP number in danger, we could hurt millions whose lives and jobs depend on our ability to pull that off. That is a larger debate than whether credit cards will now become more expensive. Let me pick up three strands of thinking I see in the Review, that accentuate this concern.

First, there can be no concrete measure of ‘overheating’. RBI admitted to the possibility of a structural change that needs no monetary intervention, the last time around. It now points out that investment and consumption demand are up, but quickly adds that productivity gains and savings growth are also up. Therefore, opinion is still divided on whether RBI should apply the brakes. Central Bankers err on the side of caution — that explains the token increase in the repo rate. Economic history is filled with examples of cautious central bankers acting too soon. It is time we agreed that we will need credit growing at 30 per cent or even more and tonnes of money to increase capacities and create jobs. We have not moved up the curve so much to worry about ‘too much money chasing too few goods’. Give us the money, please, for the sake of growth.

... contd.