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YES Bank Chief Economist Indranil Pan on RBI Policy
This story was originally published at 13:40 IST on 5 June 2026
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MUMBAI - Indranil Pan, chief economist, YES Bank, said the following on the Reserve Bank of India's second bi-monthly monetary policy statement for 2026-27 (Apr-Mar) detailed Friday:
This policy was more about addressing the paucity of foreign flows into the Indian economy and addressing the external sector problems rather than addressing the growth-inflation dynamics. The critical measures to boost FPI investments into the G-sec (government securities) markets include tax measures such as withdrawal of withholding tax and the LTCG (long-term capital gains) tax. Banks are allowed to raise FCNR(B) deposits of 3– to 5-year maturity with RBI bearing the full hedging cost. Banks are also allowed to raise ECBs (external commercial borrowings) with a concessional forex (foreign exchange) swap. While it is difficult to pin down the exact nature of inflows, $35 billion-$45 billion may be a decent estimate, almost enough to close the gap for the anticipated BoP (balance of payments) for FY27. The policy challenge is to address falling growth and rising inflation. RBI, with its pause today, has bought itself more time to understand the growth-inflation dynamics and probably did not want to immediately react with a rate hike to match its higher inflation forecasts. Having said that, all policy options remain open as the RBI assesses the risks to inflation trajectory alongside the second-round impact via inflation expectation surveys, before deciding on rate hikes. End
Compiled by J. Navya Sruthi
Filed by Rajeev Pai
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