Who will bear the cost of the emperor's new clothes?

In an effusive article Sunil Sanghai lauds the two years in office of Reserve bank (RBI) Governor Shaktikanta Das. When Das came into office the non-banking finance company (NBFC) IL&FS had collapsed with losses of Rs 8.48 trillion. The Yes Bank crisis was beginning to emerge. Interest rates were too high though inflation was under control, depressing credit growth. "In contrast, we are in a happy space today with robust post-Covid economic recovery, lowest interest rates in 20 years, a system plush with liquidity, a stable currency, a higher foreign exchange reserve, a more stable banking system with resolution of some of the financially stressed institutions, a relieved non-banking financial sector and credit and economic growth taking the centerstage for the central bank." Retail inflation has never been under control in India. Except in 2016 when average inflation rate was 2.23% and in 2017 when it was at 4%, because of sudden demonetization of high value banknotes on 8 November 2016, retail inflation has always been higher than the government target of 4% set in 2015, although there is a range of 2-6%. The Monetary Policy Committee (MPC) which sets interest rates warned of financial instability if real interest rates fall too low. Former Governor Prof Raghuram Rajan recently put operative real interest rate at -4% in India . "If this results in persistence of negative real interest rates for too long, it can adversely affect savings, lend support to mispricing of financial asset prices and encourage excessive leveraging," said Mridul K Saggar. High prices and low interest on their savings have hit middle class Indians very hard, yet no one is talking about them, wrote Shayan Ghosh. On the other hand, "India's billionaires reported a rise in their combined net worth by more than a third during the first four months of the coronavirus-induced nationwide lockdown, i.e. between April and July, defying the impact of the global economic fallout of the pandemic. According to the Billionaires Insight Report 2020 published by UBS and PwC, the net worth of Indian billionaires between April and July increased by 35% to $423 billion." Naturally, super-luxury real estate, costing in excess of Rs 250 million (Rs 25 crore) are selling fast. "What is encouraging is that nearly 40 percent of the inventory that we sold was priced between 25 crore and 40 crore," said Akash Ohri. "Insolvency cases in India are expected to spike in the coming days, as they did world over after the 2008 financial crisis," according to MS Sahoo, chairman of the Insolvency and Bankruptcy Board of India (IBBI). Gross non-performing assets (NPAs) stood at 8.5% in March 2020 and is expected to rise to 14% by March 2021, wrote Sushil Prasad. "In India, the net profits of listed companies grew 25 percent (in real terms) last quarter. This despite revenues shrinking because firms aggressively cut costs, including employee compensation," wrote Sjjid Z Chinoy. The government owns the RBI so the governor is doing its bidding as he was appointed to do. But, serving the government is not the same as serving the taxpaying citizens of India. At some point accounts will have to be settled. The governor has stitched some new clothes for the emperor.