Monday, March 4, 2013

The New Normal

The Budget is built on the assumption of a nominal GDP growth rate of 13.4% with an underlying inflation of 6.5%. Is it the new normal for inflation against 5%, held as the “tolerable” rate for more than two decades? Would RBI adopt this as its assumption for monetary policy in 2013-14? If it has a different take on the subject, would it not result in a disconnect in the coordination of fiscal and monetary policies?


- A SESHAN (ET)

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