The concluding sentence of the editorial "Tears from onions"(October 15), sums up the problem of food inflation. Supply constraints continue to blunt the edge of the monetary policy. The government - not the Reserve Bank of India (RBI) - is responsible for raging inflation on two counts: its inability to remove the supply constraints and the continuing fiscal deficit. Andy Mukherjee's article "Towards inflation targeting" (October 15) has targeted the monetary policy of the RBI for the continuing inflationary trends in the economy. This is quite a wrong diagnosis in the Indian context. The RBI has repeatedly reminded the government about the limitations of the monetary policy in tackling inflation. It has even advised the government to remove supply-side bottlenecks and to rein in government finances. The monetary side of the inflation story has been over-emphasised during the last five years. Tinkering with policy rates will not tame inflation.
K V Rao Bangalore
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