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" There will always be divergence of views on the output gap, as it is unobservable in a rigorous direct sense. There are only estimates. How can there be a strong consensus on that? "

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" An owl is traditionally a symbol of wisdom, so we are neither doves nor hawks but owls, and we are vigilant when others are resting. "

Urjit Patel

Wisdom

Resting

Vigilant

" There are tens of thousands of bank branches and 4,000 currency chests. We need to be careful and try that this is a number which is not a mere estimate but a verified number both physically and in the accounting sense. "

" Growth is always there in the MPC's scheme of things; we don't lose sight of that, but not at the cost of inflation. "

" If very fundamental reforms take place, especially when it comes to factors of production like land, labour, then a higher growth rate is possible. "

Urjit Patel

Place

Growth

" I think that it is important that one grows a thick skin fast in this business, and I think we have done that. "

" From the RBI side, the fake Indian currency note is an important issue that needed to be addressed. The other collateral benefits from this, in terms of greater accountability, better public finance, more transparency, are, by definition, areas that take time to fully play out. "

" It is easy and quick to fritter away gains regarding macroeconomic stability. "

" I think it is important that we should be on the side of keeping borders open with respect to trade and movement of factors of production. "

" Large credit guarantees also impede optimal allocation of financial resources and increase moral hazard. "

" The two important variables for the policy formulation are projected inflation and the output gap. There is no clear hidebound mathematics that we must give 'X' weight to inflation and 'Y' weight to growth and form the associated policy. "

" What is important is that in a capital-scarce country like India, the real interest rate needs to be positive enough to encourage healthy growth of financial savings; we get into macro difficulties when real rates on financial savings become negative for a length of time. "

" Divestment measures would improve overall banking sector health. "

" Yes, 4% is the government-mandated target to the MPC. The plus/minus 2 percentage-point upper and lower bands are the tolerance levels specified by the government. If we breach those for three consecutive quarters, we need to inform the government of why that happened and what we propose to do to bring inflation within the two bands. "

" People were holding high denomination notes to keep tax unaccounted for money. Some sectors like real estate were using cash to avoid tax. "

" Very few countries grow at high rate if inflation is high and volatile. I think, in a way, we are doing our bit to support a higher growth rate, but on a durable basis. "

" The lack of a consistent policy from major economies is the main source of volatility. "

" A well-functioning transmission should at some point go from the overnight right up to 40 years, and that is the ultimate objective in having monetary transmission that affects the whole gamut of borrowing tenure. "

Urjit Patel

Right

Ultimate

" I think India's policy that the openness of trade should be carried through a multilateral process is the right one. "

" I think that is a very important milestone in our economic history that the monetary policy is now determined through a committee process where there are both independent committee members and representation from the RBI. "

" Monetary policy transmission encompasses the whole continuum of interest rates; of course, the central bank only determines the overnight policy rate. "

" The RBI is interacting with the banks every day. "

" We should redefine the metric for effective lending, viz., prioritise loans to enterprises, which will generate more employment. "

" We have been mandated by the government, backed by legislation, that we have to have an inflation target of about 4%. "

" Government should eschew suasion and directives to banks on interest rates that run counter to monetary policy actions. "