If only everyone did as they are told to do.

Yesterday the Reserve Bank kept policy rate unchanged at 6.25%, while predicting lower retail inflation and lower growth rate. It however softened its stance for the future. The Monetary Policy Committee, formed by the government, last year is charged with setting rates, and was set an inflation target of 4% (plus/minus 2%). This was an effort to cut the powers of the governor, in response to the actions of the previous governor, Raghuram Rajan, who was not afraid to tell the truth. He was treated with uncouth discourtesy and the present governor, Urjit Patel was appointed instead. Even he has refused to toe the line. Et tu Brutus. One member of the committee, Prof Ravindra Dholakia, cast a dissenting vote, but it is not known which way he voted. To add salt to the wounds, Governor Patel said that all members had refused to attend a meeting with finance ministry officials one week before the MPC meeting. This was clearly a shameful effort to arm-twist the committee with bogus statistics. "The meeting did not take place. All MPC members declined the request of the Finance Ministry for that meeting," said Patel. Predictably, the decision was met with teeth snarling fury by government fellows. Economic conditions warranted a substantial monetary policy easing, said Chief Economic Adviser, Arvind Subramanian. "I think there is a plausible macro-economic assessment," he said. "Inflation forecast errors have been large and systematically one-sided in overstating inflation." Dr Subramanian is a DPhil in economics from Oxford, as is Dr Monmohan Singh who was the Prime Minister when retail inflation jumped over 10% in 2009 and stayed there till 2013 so that the Congress was almost wiped out in the general election of 2014, being reduced to a paltry 45 seats in the Lok Sabha from 206 in the previous parliament. Do they want a similar fate for Modi? The RBI expressed concern about bad loans in our banks and loan waiver for farmers. After a loan waiver by the newly elected BJP government, costing Rs 364 billion in UP farmers in other states demand the same. Maharashtra caved in recently, inviting a caution from the RBI. Maharashtra's public debt will cross Rs 4 trillion, incurring interest outgo of Rs 310 billion per year. Five farmers were shot dead in Madhya Pradesh while protesting for loan waiver. Farm loan waiver will cost Rs 2.57 trillion by 2019, said Bank of America Merrill Lynch. The share market is at record territory, with no correction. Promoters of companies have borrowed Rs 2.45 trillion against their shares. If interest rate goes down share prices will rise even further and they will borrow even more. If the market turns suddenly banks will be left holding a lot of useless paper. Government versus the people - the RBI is our only protection.