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Journalism of Courage
Y V Reddy explained the reasoning behind his policy initiatives to Sourav Majumdar. Excerpts:
On the big picture
It is a clear signal that imbalances-whether it is the credit-deposit ratio, excessive credit or other imbalances-have been significantly corrected. So, on current indications, we are in a state of continued growth with stability, both on the price and the financial front. On the domestic front, we don8217;t see anything that needs serious fixing, except liquidity.
On capital inflows
It is not possible to take a view on capital flows and liquidity at this juncture. I believe, we can afford to get away with it, without necessarily insisting on a presumption and keep the option open of waiting, seeing and responding at the adequate time.
On asset price concerns
We are satisfied that the banking system has not taken too many risks8212;that8217;s the current indication. The problem arises because of the flows, which arise from the external situation. If the money keeps flowing to the markets and to real estate, it8217;ll push prices up. But I cannot keep squeezing the banks on that account, except to tell them that as far as your exposure goes, please see that it does not make you and the system vulnerable.
