Wake up and smell the ...

Here is a quick quiz:
True or False?

1. The world is spinning rapidly into a period of deep recession
2. Millions of jobs will be lost, in developed and developing economies
3. Commodity prices (oil, metals, foodgrains) have crashed and are only going further south
4. Consumption is declining (will decline even more) as people have less disposable incomes to spend
5. India is not immune to the global slowdown (as seen by the 1.3% growth in the Index of Industrial Production for August) and is going to feel the shocks of a slowdown. Already Q2 results have been terrible and things are going to get worse before they get better.

If you answered True to any / all of the above questions, you are in disagreement with the esteemed Reserve Bank of India. In its mid year policy review, the honorable central bank has kept key rates unchanged (repo rate at 8%, CRR at 6.5%, reverse repo rate at 6%). It has not even cut the SLR. It thinks inflation will be at 7% for the year and GDP growth rate will be 8% (no, this is not a typo). At a time when Keynesian stimulus is the order of the day (this is not only my opinion, Paul Krugman, the Nobel Economics Prize winner for 2008 thinks so too), our central bankers prefer to be dyed-in-the-wool monetarists!

This attitude reminds me of the Indian economy in 1994-95 when similar bull-headedness (or should I call it bear-headedness?) in terms of interest rates cost India a full 4 years of lost growth. Anyone listening to history at the RBI?

One of you or the honourable RBI is smoking dope, and I dont think it is you!! By the time these esteemed gentlemen wake up and smell the shit, the economy will be in a shambles, credit growth will have crashed and investments would have been totally squeezed out of the system. But hey! who cares?? It will be time for a new election...