Dear Sir
Apropos the Article Count _ Counterpoint (ET 3rd Aug 26), the MPC is in a Catch 22 situation to decide on the policy change on rates in the background of continuing inflation ,inflationary expectations thanks to geopolitical uncertainties, failure of monsoon prospects and visible expectations of economic growth . The need of the hour is price stability which is a gambling not only on agricultural production, marketing ,distribution and monsoon but several other factors including laxity in governance and fiscal position. Cost of living and inflation are two parallel lines and cost of production is altogether another dimension dependent upon several linkages and incentives having both tax and administrative implications.
While MPC can have control on the Financial system through monetary policy ,the Government having control on both Fiscal and administrative policies has to do lot of manoeuvring to ensure economic growth keeping the prices stable defying the challenges from political Social and technological dynamics seen of late due to AI invasion every where.
T.V.Gopalakrishnan
( email( Letter addressed to ET )
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