Food supply and Money supply are two different aspects

 Economic Growth also helps inflation to come down is simply ignored by the RBI. The rigidity with which the rate of interest is linked to inflation and that too CPI index is irrational (although highly desirable) and it is akin to chasing a mirage in the present economic scenario. Besides, RBI by sticking on its policy rates only to inflation fails to comply with its statutory requirements ( well spelt out in the preamble of the RBI Act, 1934) of ensuring growth with price stability. Why RBI does not want to  recognise that indian economy is way behind advanced economies to adhere to only inflation targeting through its monetary policy is a mystery .Indian economy has its own uniqueness wherein, the banks have social responsibilities , the government has a huge burden to lift the masses from poverty through various schemes injecting money, the economy itself has fundamental issues of fiscal deficit thanks to its heavy dependence on imports of certain essential items like oil, coal etc to run the industries, requiring heavy dose of bank finance . Besides, the presence of informal economy also upsets all the official moves to have a smooth run for the economy.  Unless RBI takes a holistic view of things which was all along the practice followed by it since its inception in 1935 and making the  banking system support the growth with provision of adequate credit at reasonable cost, the growth may not take place.  RBI's stance and support of the economy keeping   a sound and healthy banking system has been well acknowledged and well recognised all over the world.It has withstood all imaginable pressures with ease and dignity and supported the Government keeping its restricted autonomy in tact. The economy cannot be expected to do better  without money. As credit is the life blood of commerce and in India only the banking system can provide this vital element RBI has a key role in ensuring that the transmission of credit at reasonable cost is made available at appropriate time.This has to be made known to RBI by veteran journalists through their write ups is something unfortunate.The article carries lot of message and still RBI wants to be adamant on its undiplomatic and dear monetary policy, its supremacy may be at risk.RBI has never failed and it  should not fail in its responsibilities to the nation and its masses.Economic Growth with price Stability can take care of both.Shortage of food supplies in the market cannot be tackled with containment of Money supply is what RBI has to realise and proceed.

Dr.T.V.Gopalakrishnan

(Modified version of this is published as comment in Times of India in response to an article by Prem Shankar Jha on 20th Oct,2014).