RBI move on restructuring MSME loans inadequate, feels Pronob Sen

"Now what they are saying is no more moratorium, but you are allowed to roll over the loans, in a sense you are permitting banks to roll over the loans.

Also, the measures are discretionary, so when something is discretionary, who are the ones who will benefit. The numbers are not large, if you are using this measure as a substitute for the moratorium, then the numbers are very small. So there is going to be a triage in the banking sector. We do not know who is going to fall by the wayside,” he said.

Sen also felt the RBI was being optimistic in its projection that a good monsoon and consequently a good harvest should keep inflation in check.

"What is different now from last year is that last year rural India was unaffected. This time rural India has been affected, the fear factor is high, and we don't know what is going to be the activity levels. It was the rural activity that kept the economy going for much of last fiscal. This time we are not sure if there will be enough transactions for urban prices to hold up,” he said.

Sen said that in the past too, despite good production, supply chain and logistic issues had led to prices shooting up. However, he said that RBI was unlikely to raise rates to tackle the situation as it would only suppress economic activity further.