This has reference to the feature “Real truths about interest rates” (Business Line, September 15). The writers, by quoting various rules and theories, have researched well the influence of monetary policy, particularly the interest factor, on inflation. But treating inflation purely as a monetary phenomenon seems to be incorrect, if we are to go by the explanations of non-monetarists on inflation. That has also been the problem with the monetary authority (read Reserve Bank of India) that has been obsessed with increasing policy rates and showcasing to the Indian people that it has been doing its best to control inflation. It is time for the RBI to have a dialogue with the mandarins of the Finance Ministry on the need to control fiscal deficit. Fiscal deficit has still not been reigned in despite the one-time bonanza (read Telecom auction deposits) received by the Government. Further, the Food Ministry's neglect of supply side has aggravated the inflationary situation. The persisting inflation in India has already undermined the role of the RBI and it is time for the Government to tackle it through non-monetary instruments. Why don't the writers of the monetary phenomenon of inflation take an integrated view and treat the subject in its totality?
K. V. Rao, Bangalore (BS)
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