Well analysed and well presented. The approach of RBI targeting inflation control ignoring the growth aspect completely is at variance with the statury responsibilities entrusted in terms of the RBI act. The historical understanding between the RBI and the Government to have an economic policy consisting of Fiscal policy of the Government and monetary policy of the RBI with mutually reinforcing measures to ensure economic growth with price stability and monetary and financial stability seems to have been gradually given a go bye and both the government and RBi are moving on different directions the way both function. RBI's intentions to control inflation and having an inflation target are appreciable, but the measures taken by it alone without any understanding with the Government and without having an ideal economic environment will not lead to anywhere is what needs to be realised. From this angle,the article raises some valid observations and RBI will have to make it clear to the market the basis for its present approach ignoring the statutory provisions and keeping the inflation targeting which has only limited bearing of the monetary policy in reality.
Dr.T.V.Gopalakrishnan
(this comment is in response to an Article RBI in search of a theory that appeared in The Mint dated 30/9/14).
No comments:
Post a Comment