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- According to State Bank of India report,easy money policy will be ineffective to push the slow growth engine.
- An easy money policy is a monetary policy that increases the money supply usually by lowering interest rates.It occurs when a country’s central bank decides to allow new cash flows into the banking system.
- Recently,the Reserve Bank of India(RBI) had cut the repo rate by 25 basis points from 6% to 5.75%.Repo rate refers to the rate at which commercial banks borrow money from the RBI.
- However,SBI report has said that easy monetary policy with a reasonable tight fiscal deficit will be ineffective in addressing the existing demand slowdown.
- The report suggested that government should use the forthcoming budget for more direct and quicker fiscal measures as financial system is in need of some serious reforms.
- Further,the SBI report also referred to India’s quarterly GDP growth which has declined to a five-year low of 5.8% for the March quarter pulling down the full-year GDP for FY19 to a low 6.8%.
- SBI report has also suggested that the ongoing crisis in the non-banking finance companies which constitute up to a fifth of the overall lending in the economy needs immediate attention to revive the fortunes of the financial system.



