Some of my view on RBI Policy /decision

Friends,
I remember I use to ask here and at other forums as well that "What is the exact or even approximate amt of Sub prime mortagage debacle?"This was around in Feb/Mar/Apr
The figures then given were couple of hundreds billions and they were also not so authenticated, maybe less or maybe more.
But it turned out to be bigger then that.Even after $700 bn bailout passed,the US market is not going up.
Well, I started a debate at some other forum maybe a month or so back whether our x-RBI governor did enough to see that India's growth is not hindered while increasing the CRR (Credit Reserve Ratio)?But there was no answers or views , saying we are too small to understand the complexity of RBI action and we need not indulge in it.Others opinions were that what YV Reddy did was good as the Subprime crises came out.
But again there was a redebate on whether YV Reddy did what was needed.
Actually I was of the opinion that YV Reddy was very very defensive in his approach.
When I use to hear him and PC speaking that the FDI and FII inflow is so big that we can't handle I use to get surprised.They were not so big as China nor other BRICScountires that we need to be catious.But they went on increasing the CRR and went on increasing the Int rate as well.
The CRR started getting increased well before the SubPrime Crises came out ,means before Jan 08 , in the name that housing sector is hotting up and economy is also heating up.HDFC chief , Deepak Parekh,also came out with is view that there is a need for increasing this so to cool down.
I didn't understand then that with 8-9 % GDP,and that too for 6 months or so how the masters feels that we are heating up.China was having the growth of over 11% since a decade and only in around Jan08 they went saying that they need to cool down.
Well, the mistake RBI made was even after seeing the market crashing due to FII selling they still went on increasing the CRR rate to cool down the infaltion, which was not so high in Jan 08, around 4-5%.Then what was the need for the CRR rate to increased?Let be left alone, what was the need to increase the CRR rate even after seeing that the liquidity is squezzing due to distress selling of FII which was coming in billions of rupees in after Jan 08?
CRR makes a direct impact on liquidity.If we increase the CRR then bank has no money to lend.They need to borrow more from elsewhere to keep the CRR rise.They made a cascending effect in out market as on one side FII's were selling in big way and other side RBI was increasing the CRR and also the Int rate.So money were hard to get for even brokers and indivuduals who has put their shares as colletarals with bank as the limit becomes less as the limit is decreased for the amt banks give due to CRR hike.So the liquidity get quezzed in any form.
Actually by increasing the CRR and also Int rate we went a step back to hinder our growth.It was just like we ourselves wants to go back in recession!I think after seeing the Financial Debacle in US ,UK ,RBI should have stopped increasing the CRR , instead they went on increasing till last month!The situation is such that our market is going like nine pins and it is like market is discounting the GDP at 3-4%!
CRR and Int rate increased do not help in bringing the prices down.If the money is not there for the farmers, merchants, business man how they will buy things in a big way to stock and sell to consumers?If Int rates are going high then natuarlly the prices of commodities and grosseries will also go high.I think the whole idea is wrong that if we increase the int rate and CRR then we can tame inflation.The real solution for this is , we need to produce more so that the rates becomes stable.But instead of taking steps for increasing the production we are taking the other way which has boomranged!
According to me, RBI should have acted very offensively not to increase the CRR and Int rate when FII's were selling in big way for last 9 months.RBI and Fin just went on looking at inflation as the sole criteria for CRR and Int rate.
What I want to emphasis here is , when the action was needed while FII's were selling in our market RBI did nothing to cushion it instead they make the situation worst and that is why we are seeing the meltdown here.......more due to FII selling then anything else.End result is our market has already discounted the slow economics growth of 3-4% GDP that will suppose to come in next year, which in fact may not be slow as market is discounting and whenever the market will see that it will start going up and next bull run will start before anyone have any clue which use to happen in past.......
Well, these are my view and as I am a science PG , I maybe wrong in my view.Would like to have views from others who have studied economics and learned it in college .....