RBI kept Repo rate and CRR unchanged and as Rupee fell bac to 53 it was clear RBI’ sintervention was valued and some saw it as a sign that the rate cut could be advanced, however misplaced that expectation might be. The launch of the 12th plan period is key however especially with Fixed Investment formation falling into negative territory. RBI needs all the support it can get rather than using india’s miniscule reserves to support more government support as astrategy. While Europe will remain in the throes of the crisis which is most of 2012, and some of 2013 it is unlikely thaat global growth will spring back in India and China exclusive of anyone else.
However the only remaining reason for growth being shot in India is the free unwinding of the rupee at every dollar purchase in the Indian market and statistically that will only support higher growth as inflation remains tidy on the higher base effect. Rate cuts will start sooner than later but not probably within this fiscal as the free falling of the rupee mightjust not let the rate cuts be any effective in stimulating growth
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