Rajan Must Get Radical

... While many have focused on the symptoms of India’s recent troubles — twin deficits, high and unstable inflation and, more recently, rupee weakness — we believe that Rajan should focus his attention on structural issues underlying these problems. He needs to focus on two main areas: (a) monetary policy, and (b) the role of financial sector regulation. The most pressing issue facing the RBI is inflation, which has a disproportionately negative impact on the poor and disadvantaged, those with fixed incomes and those with the least bargaining power in society.................

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