The writer is chief economist, CRISIL.
A waning supply shock in an environment of tepid demand affords RBI elbow room to wield the knife.
They must also be willing to do the heavy lifting to kickstart the investment cycle.
For the budget to succeed, government needs to build institutional capacity to carry through proposed public investment, step up divestment.
Low rates will help. But sustainable higher growth requires the government to debottleneck sectors and push through pending reforms.
RBI is right to hold off on rate cuts. Inflation must hit a sustained low first.
To keep CAD in check, India needs to pay attention to the rising trade deficit in mining, not focus on gold imports.
While RBI is holding rates steady, government needs to overhaul food markets.