While the priority sector lending continued, the administered interest rate regime was dismantled. To make up for the shortfall in the priority sector lending by the banks, the Rural Infrastructure Development Fund (RIDF) was initiated to ensure the envisaged flow of bank resources to agriculture through the intermediation of the NABARD and the State governments.
It is therefore important that second-round effects of oil prices are avoided and that monetary policy helps to minimise the likelihood that other risks materialise. From a conceptual point of view, I agree that monetary policy predictability is a desirable feature that enhances policy effectiveness.