The suspense is over. Hours before the deadline for the expiry of the monetary policy framework agreement at the midnight of March 31, GoI announced its decision to extend it by another five years. Wisely so. The present climate of uncertainty is not the time to make drastic changes in the framework. But that does … Read more
The writing has been on the wall for some time. India’s monetary policy framework is dead. Not legally, but practically, as extreme circumstances have forced relooks at key assumptions and objectives behind the vaunted inflation targeting framework. Even before Covid-19, the inflation targeting framework seemed to be biased towards keeping rates high. While nominal growth … Read more
The flexibility that RBI has been able to show in response to the Covid-19 crisis is the most recent case in point. Synopsis But the key point is that the monetary policy is working, and GoI and RBI need to allow it to continue. What do we mean by ‘functioning quite well’? First, RBI responds … Read more