.............In his three months as the Governor of the RBI, Rajan has made three important policy statements. All of them have shown a fixation upon controlling inflation: in none has he shown the slightest concern for growth. His second quarter policy statement on October 30 is the most explicit. In it he comes within a hair’s breadth of saying that growth is not a goal to be pursued for its own sake. It will happen automatically when the government sets everything else right. At the head of his list is inflation. Rajan believes in an ‘activist’ monetary policy, i.e in one that keeps the nominal rate of interest higher than the rate of inflation. So, to the intense disappointment of industry he has continued with his two predecessors’ high interest rate policies................
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