"Falling out of love is
very enlightening. For a short while you see the world with new eyes."
—Iris Murdoch (Irish,
1919-1999)
Word for the day
Vox Populi (n)
The voice of the people;
popular opinion.
Malice towards none
Someone
who defied the Party leadership blatantly and enjoyed the hospitability of the
principal opposition party is now CM of Arunachal Pradesh.
Indubitably,
BJP did lose the plot in Arunachal Pradesh but how is it a victory for the
Congress Party?
First random thought this morning
Pokemon craze is spreading like an epidemic.
I avoided at least five near collisions while walking in the
famous corridors of the Connaught Place in New Delhi.
It is common to hear parents complaining about rise in their
telephone bills as the data usage has jumped manifold.
On the positive side, parents are relieved that at least their
children want to go out of home to 'play'!
That is the precise point! Sir
Outgoing RBI governor Raghuram Rajan (of "My name is Rajan
and I do what I do" fame) came down heavily on his critics, in an open
forum. He challenged them to prove that inflation is low enough to term RBI
behind the curve on policy rates - "I am not sure where we are behind the
curve. You have to tell me that somehow inflation is very low for us to be seen
as behind the curve," he said.
I feel, amidst all the drama in past couple of months, to which
the entire world stood witness, this point seems to have been largely missed.
In my knowledge, no one bothered to ask the governor - "Sir, please show
where the inflation has come down due to the policies followed by RBI in past
three years?"
Despite acknowledging on numerous occasions that inflation in
India during past 4-5years has inter alia been a function of (a) serious
supply constraints; (b) poor weather conditions impacting agri prices; and (c)
volatility in global commodity prices, RBI has not adequately explained to the
common man - "how tight monetary policy is necessary to help their
cause?"
I believe this world is like a prism. You see different pictures,
colors and hues depending upon from which angle you are viewing the world and
in what light you are viewing. Therefore, while all views and colors are
equally valid, your "truth" is always what you see from the point you
are standing at a given point in time and under the current light.
Where I stand, I can see that the consumer inflation has been the
primary monetary policy consideration in India for past couple of years. This
happened at a time (a) when most of the developed world is struggling with
deflationary pressures; (b) the producer prices in India have been under
immense pressure; (c) the credit demand in the country has completely
collapsed; (d) exports are declining ominously; and (e) financial system is
seriously undercapitalized.
I cannot find much that would support the current lending rates -
not even consumer inflation and relatively stronger INR.
My inquisition to the governor is that under such conditions what
is the relevance of RBI's fight against inflation?
From my interaction with people and experience of travelling
across the country I understand that through tight monetary policy only a small
part of the problem could be handled. The development, fiscal, monetary
authorities may need to work in tandem to provide a holistic solution to
stabilize the prices.
Unfortunately I have not seen much effort from the RBI side to
cooperate on the policy side; regardless of what the former governor Mr. D.
Subbarao has revealed in his memoires.
....to continue tomorrow
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