Finally, the government had its way. The Reserve Bank of India, which had successfully resisted the pressure to cut interest rates, had to announce a few measures on its own.
The talk was that the government and the RBI will together announce steps to boost economy. But all the expectations came to a nought.
First, Finance Minister Pranab Mukherjee said he will quit only tomorrow and dashed the hopes of any worthwhile announcements from the government today, saying it is still in talks to devise the steps.
The RBI’s announcements were mainly aimed at boosting capital flow to support the rupee. The central bank has time and again stressed the need for the government to put the house in order before an interest rate reduction.
Media was rife with speculation that the government will increase diesel prices, signalling its intent to take up the path of reforms which it had abandoned midway.
Newspaper reports also suggested that the RBI is also likely to allow oil companies to buy dollars directly from it.
But a Reuters report earlier in the day said oil retailers together hold oil bonds worth about $5 billion, which is likely to be the maximum amount of dollars these companies will be able to buy directly from the Reserve Bank of India (RBI).
Did the market know it all? Or is it that nobody cares much now? It was cautiously optimistic as the Sensex rose just around 0.5 percent earlier in the day.
So, the disappointment was limited too.
The index ended down 0.5 percent, as none of the expected big-bang announcements came through.
The rupee, which too rose in early trades, declined after the measures announcements by the Reserve Bank of India.
The rupee has been the major casualty of the weakening economic situation.
A Reuters report earlier in the day said the impact of any measures will be limited unless and until there are steps for long term.
The currency is one of the worst performing currencies globally.
It had hit a record low 57.32 in the previous session.
The signals are clear. Even though the government can read the writing on the wall loud and clear, it is dragging its feet on key reforms. Wait until one more tomorrow, for more realistic economic measures.