RBI’s rate hike also among decisions announced last week that might pay political dividends in state polls, but could come with commensurate economic costs, say economists.
Is the Modi government prioritising political gain over much-needed economic prudence with an eye on crucial assembly elections coming up in Gujarat and Himachal Pradesh this year and more lined up the next?
The answer seems to be yes, going by several critical decisions announced over the last one week: the Reserve Bank of India’s announcement of a 50 basis points (bps) hike in the repo rate, the Union government’s extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) free food programme for another three months, and the Ministry of Finance’s decision to defer the imposition of a tax on unblended fuel.
TCA Sharad Raghavan 