This refers to K V Rao's letter "The roots of inflation" (January 13). Demographic trends in India, are indeed unique as compared to the ageing West, including advanced countries such as Japan, the US and Europe, and even China. And these are the studies quoted in the article "How monetary policy can help India regain its youth" (January 9). The Reserve Bank of India (RBI) needs to factor in these demographic considerations in framing the policy and articulate the reasons as to why just imitating the western framework and numbers of inflation targets are simply not appropriate for India. That will peg the expectations at the right levels in India and analysts abroad. In addition, RBI should initiate research studies, in-house and sponsored in universities, on the implications of young demographics on monetary policy to build more robust empirical evidence, especially applicable for emerging countries with less developed financial markets like that of India.
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Charan Singh Bangalore
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number