Some public sector bank CEOs with a short remaining tenure would prefer not taking stern action and recognizing NPAs. They might indeed prefer transferring any problems to their successor. Investors in bank shares, at least initially, do not welcome disclosures of loan losses. And depositors, knowing the government stands fully behind public sector banks, are rightly unperturbed by the quality of bank balance sheets.
And although inflation rates tend to fluctuate – reflecting not only the business cycle but also temporary factors such as changes in commodity prices – they are likely to do so at around the level of inflation expectations on average, if medium- to long-term inflation expectations are anchored at a certain level.