Even as inflation refuses to moderate in defiance of a gradual tightening of monetary policy since October 2004, the familiar calls for further tightening, for inflation targetting irrespective of any other objective (incidentally, this has not worked very well in New Zealand, once the "poster boy" of such simple-minded monetarism), appreciation of the domestic currency, increasing interest rates because currently they are negative, of there being no conflict between low inflation and high growth, etc, are being made increasingly loudly. The negative interest rates are supposed to be a disincentive for savings, thereby increasing demand and hence inflationary pressures: However, one has not come across much analysis of the correlation between real interest rates and national savings in India. On the other hand, I do recall an internal bank research suggesting that deposit growth has very little to do with the level of interest rates.
It may well be true that in the long run, there is no conflict between low inflation and high growth. On the other hand, tightening the monetary screw surely leads to, in fact is aimed at, slowing down the economy. To quote from the RBI's Report on Currency and Finance (2001-02), "
