............The biggest challenge for Rajan — an economist trained in modern finance, who has worked on policy problems of the Indian financial sector — will be macroeconomic management. Monetary policy and its trade-offs will continue to present intractable challenges in the next three years. There is, as Rajan says, no magic wand to spur growth, push inflation and the CAD down, shore up investment or strengthen the rupee. There will be difficult choices and, undoubtedly, Rajan will face political pressures. On the one hand, .............
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1 comment:
The observation “RBI has traditionally fought for status quo. India is at a juncture when more of the same policy won't help” does not do justice to RBI’s history. India’s central bank has all along done justice to its mandated role and more often beyond that. The criticism emanates from comparisons with central banks of developed countries which have their role limited to certain aspects of monetary management. RBI since at least the dawn of independence, has taken on itself the responsibilities relating to institution building and credit deployment for various purposes depending on priorities of the governments of the day, in addition to the central bank’s core functions. The present focus on financial inclusion and taming inflation which are incidentally in tune with the vision expressed by the Governor-Designate Dr Rajan is consistent with the tradition maintained by RBI.
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