This refers to the edit “Tougher choices for RBI” (September 13). The statement “...RBI is not the only agency that is tasked with controlling inflation…” has not come a day too soon but what can be done when the Reserve Bank of India itself does not think so?
Ever since inflation has reared its ugly head the Indian economic environment has only worsened, despite frequent interventions by RBI through several policy rate hikes. With all the wisdom at its command, RBI could have at least counselled the mandarins at the finance ministry on the need for fiscal discipline. Since it is not evident that RBI did so, even monetarists who firmly believed in the Bank’s strength to control inflation have been disappointed. They, too, have joined the group that believes that inflation is a non-monetary phenomenon.
Supply bottlenecks and fiscal indiscipline (despite the one-time bonanza the Centre got through telecom licence auctions) are at the root of inflation in India. There is a general consensus among all experts (monetary and non-monetary) on this point, but who will bell the cat?
K V Rao, Bangalore.
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