.........Further, an RBI committee's report on the monetary policy framework is the other big factor to watch. In the past, the central bank has faced criticism for trying to do too many things, often with conflicting objectives. In contrast, Governor Rajan has shown a preference for a single objective, that is, 'low and stable inflation'. Nor does he see a long-term trade-off between inflation and growth. Hence, the likelihood of a calibrated and gradual shift to some form of an inflation-targeting regime is high. An immediate move, however, is hamstrung by significant fiscal deficits. Despite the fiscal responsibility Act, adherence to targets has not been taken seriously, with the exception of the last financial year..........
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1 comment:
Cosmetic changes and incrementalism would not be delivering the results. Bitter medicines could be effective. But without fiscal discipline, monetary policy would be a single wheel motor bike. Re-looking at priority sector goals, new windows of options for pushing growth and looking at austerity-led growth models to promote savings and investment as two wheels of growth may all become necessary.
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