Bit of Horse sense,But a lot of Luck

 

Dear Sir,

Apropos your editorial Three New Horsemen of the MPCalypse(oct 4), the responsibility of the new MPC is huge to maintain the accommodative monetary policy itself so far pursued in the midst of neo political disturbances. leave alone changing the policy rates favoring economic growth though highly desirable. The benign inflation experienced these days seems to be tapering off in the changed political and economic scenario abroad and the domestic food inflation which continues to remain high and unbearable for the  majority of the masses can be a real challenge for the new MPC, RBI and the Government as well to tackle. The economic policy needs to be tuned afresh to suit the tunes of the emerging political scenario at international levels along with the domestic adverse scenario changing very fast due to high cost of living , less consumption, lower savings, and consequent adverse investments and things like that allowing the envisaged growth possibilities an unrealistic possibility.The need to have a very imaginative and pragmatic fiscal policy at this juncture to nullify the cascading effect of increase in prices of food items due to GST and other taxes is paramount, at the same time to make the monetary policy feasible  to tweak the  policy rates to attract savings and encourage investments keeping the cost of production at a reasonable level  simultaneously is a herculean task .Smartness of the new MPC will be judged the way it can diplomatically coordinate the Monetary policy and the Fiscal policy aiming at the impossible possibility of ensuring price stability and economic growth and save the people from the emotional and financial miseries of high inflation and high cost of living.

T V Gopalakrishnan

Bangalore.            

(Edited version of this letter appeared in ET dated 5/10/24)