Rajan is targeting retail inflation, keeping base rates around 1.25% higher. He says expectations of inflation are 10+%, meaning wage negotiations could be unrealistic and consequent hike in future prices via "cost push" in service or growth sectors. Wholesale inflation is negative suggesting demand for manufactured good is low or that producers of goods are not able to pass on higher prices. He also talks about high premium charged on bank loans, though commercial paper in many cases is cheaper than GOI bonds!

Interest rates not holding India back; markets not ready for more liquidity: Raghuram Rajan