This episode provides a clear example of the importance of transparency in establishing credible expectations and thus increasing the impact of monetary policy. Anticipation of further easing measures had started to set in from the summer of 2014, in line with a progressive deterioration in the price outlook and the contingency plans we had laid out.
First, the coverage of rural credit is extended to include facilities such as storage as well as credit through NBFCs. Second, procedural and transactional bottlenecks are sought to be removed, including elimination of Service Area Approach, reducing margins, redefining overdues to coincide with crop-cycles, new debt restructuring policies, one-time settlement and relief measures for farmers indebted to non-institutional lenders.