RBI’s choices in an inflationary vortex

.....On its part, the Reserve Bank of India (RBI) has made it clear that administered prices of petroleum products must be increased to reflect their international prices. Even if it results in higher overall inflation, such increases are imperative to lower the demand side inflationary pressures created by excessive fiscal expansion. In reality, it is most likely that fuel price revision, especially for diesel, will take place in the coming weeks and WPI inflation will, consequently, rise. How should the monetary policy react then? ........

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