This refers to the editorial "Monetary sovereignty" (April 17). Ben Bernanke's observation that we need to put our house in order is correct. Every economy needs to make its macroeconomic fundamentals strong through a co-ordinated approach between the government and the central bank. From what we have seen in our economy for the past few years, that co-ordination between the central government and the Reserve Bank of India (RBI) was missing. In the absence of strong economic and administrative measures from the government, the economy went astray, pulling down the macroeconomic fundamentals and safety measures the economy received from other nations.
Gross domestic product growth, which is more dependent on fiscal measures than monetary measures, has been ignored for various reasons and RBI now has to wage a lonely battle to contain inflation, largely caused by inaction on part of the government to augment supply through improved productivity and removal of supply constraints. Weaknesses of the economy will naturally manifest in the weakening of the rupee and adverse consequences on the flow of resources from international economies.
The sum and substance of Bernanke's message is that the economy needs to be run with appropriate fiscal and monetary measures. Expecting the stronger economies and their central banks to adjust for weaker economies is neither desirable nor feasible.
T V Gopalakrishnan Bangalore
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