................This criticism is unfair to the RBI and more particularly, to the Patel Committee. There could, conceivably, be one path which would undertake a sharp and sudden crushing of inflation, with significant dislocation or a more gradual reduction in inflation with little or no dislocation. So long as the RBI’s policy is firmly committed to a glide path of reduction of inflation to a point where it does not create distortions and inequity, one should not find fault with the RBI. The Patel Committee refers to an inflation rate of four per cent +/- 2 per cent inflation rate. One therefore expects (or rather hopes) that the RBI would be reluctant to drop policy interest rates prematurely. But the political economy of policy interest rates has to be taken into account and it remains to be seen as to how developments pan out..........
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