Let me make a comment here on the Reserve Bank’s efforts to support infrastructure financing. Infrastructure requires long-term finance, and it should ideally be funded by long term sources like insurance and pension funds. Since these markets in India are still not deep enough, the burden of financing infrastructure is falling on banks.
Because of sizeable excess liquidity expected to prevail over the coming years, the deposit facility rate is the policy rate that can steer those interbank conditions most effectively. Benoît Cœuré argued that given your oversized balance sheet, you can retreat from asset buys without risking an unwarranted rise in term premia. Do you agree with this argument?