The Federal Reserve could replace its current holdings of Treasury securities either with other assets that it is already authorized to hold or a wider range of other assets, including some that could only be purchased if the Fed were granted new legislative authority. This direction, however, is the boldest one and could raise concerns about neutrality, credit risk, and political pressure.
Measures that counter such a benign credit culture are often well-intended, but as the experience so far has shown they tend to be seriously counter productive. There is a need for a consensus in this regard, so that, rural credit system in India is compatible with our goals of higher growth and better equity.