Central bank independence and inflation

.........The performance of RBI and the central banks of some third world countries, however, are not too far from the stereotype of the policy analysts who oppose the Fed. But, even in the India and other countries where inflation had reached two-digit levels in the recent past, the segniorage does not form a significant part of government spending. It is estimated that till the 70’s, segniorage in India was not more than one percentage of the GDP and after the 70’s, it was around 1-3 percentage.  Most economists and policy analysts believe that political independence has allowed central banks to become close to the most efficiently run government institutions in the western world.  Price stability is found to be positively correlated with the degree of independence enjoyed by the central bank.

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