Will the stimulus work in time?

Couple of days back the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) voted 4 to 2 to lower interest rate by 25 basis points to 6.25%, and changed its stance to 'neutral' from 'calibrated tightening'. Noted policy hawk Michael Patra and dove Ravindra Dholakia both voted for the cut. "In signs of RBI/MPC policy line aligning itself more decisively with the government's and that Das, a long-time finance-ministry bureaucrat before assuming governor's role, is indeed putting his foot down, RBI raised collateral-free agricultural loans to Rs 1.6 lakh from Rs 1 lakh." In 2016, the government set a target of 4%, plus/minus 2%, retail price inflation rate for the RBI, but the MPC was more concerned about growth in the economy because it is expected to soften to 6.65% in the second half of the financial year. "In a move to increase liquidity flow to non-banking financial companies (NBFCs) in the country, the RBI on Thursday announced that banks assign differential risk-weighted to their exposures to NBFCs, based on ratings assigned by credit rating agencies, as against the existing practice of a uniform risk weight of 100%." NBFCs borrow short term debt and lend long term loans and retail customers are not protected by deposit insurance, so they are shadow banks," wrote A Mukherjee. 30% of new credit over the last 3 years have been from NBFCs. "The RBI is finicky about who gets a banking license, but even owners of bankrupt power firms are welcome to write home loans." The RBI relaxed rules for companies to buy assets of bankrupt companies by borrowing money overseas. But, is lack of financing holding back sale of bankrupt firms? Almost three years later, "Litigation has tied down some big restructuring deals and bankers are starting to sell bad debt at fire sale prices rather than wait for the system to work better." "The billionaire Ruia brothers have used every trick in the book to ensure their prize asset stays in the family, despite owing financial creditors Rs 50,800 crore ($6.3 billion) in unpaid dues," wrote A Mukherjee. Despite a Supreme Court ruling allowing Arcelor Mittal to go ahead with its takeover of Essar Steel another appeal has been filed at the Supreme Court which will delay the deal for months. The RBI was persuaded to cut its policy rate because of increased consumer confidence, lower inflation expectation and capacity utilization still lower than the optimum of 82-85%, wrote A Iyer. Will this move by the RBI stimulate growth or raise inflation rate? More to the point, will it help Prime Minister Modi win general election in 2 months time? May depend more on what happens in the rest of the world. We shall see.