.........While Rajan has clarified that RBI has not yet decided on moving to inflation targeting with CPI as the sole index, he has voiced concern over a "sticky and high" CPI inflation, which was making people reluctant to invest in fixed income assets like bonds and bank deposits, and instead shifting to gold and real estate. This was not just lowering household financial savings rate but also widening the current account deficit, weakening the rupee and posing a risk to growth revival. While Rajan has set up a committee to look at the nominal anchor, experts have started pointing to a number of flaws in the new CPI and the dangers of relying on it to frame monetary policy..........
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