Unlocking Growth: Focus on Liquidity Over Rate Cuts, Says Mishra

Axis Bank's chief economist Neelkanth Mishra emphasizes the importance of enhancing liquidity to drive economic growth, rather than relying on rate cuts. He advocates for regular open market operations and incremental CRR cuts to provide durable liquidity. Mishra also stresses the urgency of expanding power generation capacities.

Neelkanth Mishra, chief economist at Axis Bank, has called on the Reserve Bank to prioritize easing liquidity as a strategy to stimulate growth, rather than simply cutting rates.

In a discussion with reporters, Mishra highlighted that liquidity should be the primary focus if the objective is to support growth through monetary tools. He pointed out that insufficient liquidity is hindering the transmission of benefits from the recent rate cuts.

Mishra further elaborated on the need for regular open market operations and suggested an incremental cash reserve ratio cut over another mechanism. Additionally, he underscored the urgency of expanding India's power generation capacities to meet future demands.

(With inputs from agencies.)