Industrial production is refreshing at a very slow pace, credit demand is uncertain and tax collections are weak. High borrowing costs are not the main reason why investment in factories, machines and other fixed assets has all gone down. This is one reason to reduce the economic shortage by boosting GDP growth and tax revenue.

Investors suddenly pulled back at financing and caused the value of money to decline, thus forcing the RBI to raise interest rates to stem capital outflows.

Since then, India's current-account deficit has decreased and the rupee is no longer overvalued.

The risk of upsetting domestic savers is possibly the only reason why the RBI may hesitate to cut rates.

In recent years, Deposit growth in the banking system has collapsed because of high inflation.

If savers end up viewing a rate cut as a violation of the central bank's commitment to lower inflation, they might once again rush to preserve their wealth in gold and not in any productive investment.

Nifty index has increased 36 percent and may boost once the RBI starts reducing the rates.A representative rate cut may cause little danger of the RBI on inflation or financial stability.

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