Considerable scope to ease monetary policy further: Economic Survey II

Criticism of RBI: Monetary Policy Committee should target inflation better

There is a “considerable” case for monetary policy easing by the six-member Monetary Policy Committee (MPC) given that retail inflation is at historical lows and there is a wide divergence between headline numbers and inflation targets, Volume II of the Economic Survey 2016-17 said.

The Survey, drafted by Chief Economic Advisor Arvind Subramanian and his economic division in the finance ministry, also criticised the Reserve Bank of India’s (RBI’s) inflation modelling. It said that in the past 14 quarters, inflation had been over-estimated by more than a 100 basis points (bps) in six quarters, with an average error of 180