Rajan might lower real-interest-rate...

There is almost an all around agreement that Rajan (our RBI Governor) will cut repo-rate to increase money-supply for investment and consumption demand as inflation has been on a downward trajectory... Monetary-policy is considered to be a supply-side tool to increase employment and growth, and higher money-supply will help by reducing interest-rate and increasing investment, means more-supply of goods and services... More supply is likely to lower prices, the law of supply... Rajan is supply-side economist and he should understand that more investment is needed to remove supply-side problems in agriculture and infrastructure and reduce inflation... Investment and savings depend on real-interest-rate, nominal-or-market-interest-rate minus inflation... Real-interest-rate in INDIA is near 3% (8%, market interest-rate, minus, 5%, inflation) and our Governor has reiterated that he wants to keep real-interest-rate around 1-1.5% to keep savings attractive... Savings are positively correlated with real-interest-rate... In the same way lower real-interest-rate is also supposed make investment attractive... Therefore, as per the Indian condition with lower inflation in the recent data there is a scope to cut real-interest-rate by atleast 1% or 100 basis points... However, Rajan will oblige industry with rate cuts only in several rounds. Moreover, the RBI Governor would also like to match credit demand with deposit growth rate which (the credit-growth-rate) has also been lagging behind due to higher-interest-rate in the past...   Lower real-interest-rate is important to increase investment and improve the supply-side problems... Rajan might agree...