This refers to Rajeev Malik’s article “Right approach, wrong yardstick” (April 30). The author focuses on two well-known points. First, the wholesale price index inflation is being tracked for all policy considerations. Second, the current inflationary situation is mostly a supply-side phenomenon. These obvious issues are persisting problems in the Indian economy, and not much is being done to tackle these concerns.
On the the issue of actions and overtures that the Reserve Bank of India ought to reflect on in its upcoming monetary policy review for 2011-12, I think the bank needs to have a modern interpretation of its old objective of having “controlled expansion” and maintaining “price stability” in the economy. It needs to walk a tightrope to achieve appropriate “internal balances” and contain inflation, and at the same time not let the productive sectors of the economy suffer from a dearth of funds or rising costs of funds. The author has rightly argued that “we must avoid a repeat of the mid-1990s experience of killing inflation by killing growth.”
Raman Kumar Agrawalla, on email
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