RBI: inflation targeting neither feasible nor advisable

RBI: inflation targeting neither feasible nor advisable
MUMBAI . The Reserve Bank of India chief said inflation targeting was neither feasible nor advisable in India and the bank cannot escape the difficult challenge of weighing the growth-inflation trade off.
"...In an emerging economy like ours, it is not practical for the central bank to focus exclusively on inflation oblivious of the larger development context," Duvvuri Subbarao said in a speech posted on the Reserve Bank of India's website.
"The Reserve Bank cannot escape from the difficult challenge of weighing the growth-inflation trade off in determining its monetary policy stance."
He also said monetary policy transmission in India has been improving but it is still a fair bit away from best practice.

8 comments

Brahmashri Yonipoojari 10 hours ago

It is my considered view that this governor is good for nothing, what is the criteria of his appointment as governor. He is not understanding the sensitivity of the current situation in India which of course is supported by global factors. A CRR hike of 50 or above basisis points is compulsory (some harsh steps are needed). In a year commodity prices have gone up nearly 50% and he is showing his teeth to the country. Bank interest rates should be hiked, and that should match with the inflation, so that a person who deposit 10,000 rs. should get an annual interest of 12% and lending rate should go up in tandum. Such a move will result in controlling the apartment costs which has gone up mercilessly and the black money invested real estate prices will crash when there is no buyer. lot of black money has entered in metropolitan cities with Mumbai the worst. It could be the looted money or unaccounted cash. The government should apply some mechanism in such a way so as to make a crash in real estate prices. Today if you want to live in a home in India, you need to be a crorepati, when common man and the poor cannot become a lakhpati. Use good sense. The prices of eatable goods should crash, cost of luxury items should go up. Consider a poor and rich both are biological human species in this biosphere with a life span. Let them live and allow them to eat their meals properly. Indiavision 2020 should be shifted to 2030. Follow Dr.Y V Reddy ex-governor view low inflation and slow growth, only this will work for India, or else such governments will not survive for long. Today the rich is enjoying all luxuries and the poor is striving for a bread.

DAVID

how can supply of agricultural products be increased when the government is forcibly grabbing productive land from farmers for irrelevant purposes like F-1 Tracks! more than 25% of our country is waste-land which nobody wants to do anything with! these vast contiguous tracts are hardly inhabitated coz there is no hope to earn a livelihood. cant the government set up Special Economic Zones, Industrial Townships etc. in such areas? This way, we will also geographically spread the growth of our country and minimize urbanization! As it is, our cities are turning into ghettos! The rural poor are only being devastated! May sense prevail. Maybe, the Lokpal Bill is one way!

S S 16 hours ago

Manipulating 'Repo' and CRR are RBI's prerogative but these are not the only leavers to handle inflation. In today's globalization scenario we can not insulate our economy from external factors. We need centralized economic council represented by other ministries too, who have to be sensitized to act vigilantly and manage supply and demand mechanism through revenue, fiscal leavers as well as psychological measures. This is right time to direct agricultural efforts to address excess and shortage of staple food items. So is the policy decisions on minerals and metals. At the same time there has to some control on speculative trading. There may not be perfect solution but experimental methods in economic laboratory can through lot of inside vision to smooth business cycle.

Devil

16 hours ago Honorable Governor..it is strange that u r also talking like a politician. past two years you have been sleeping and dancing to the tunes of the ruling corrupt government. while i agree that supply is a serious concern, what have u done to curb exorbitant artificial demand? why did u not increase interest rates earlier? why did u not tighten money supply for so long? even now u have not squeezed CRR. the poor ordinary citizen has been bitten by a double whammy...1. mammoth inflation on account of over 50% increases of food items, transportation etc. and 2. negative returns on fixed income investments like fixed deposits !!! Shri Y V Reddy set a wonderful example of RBI governance...u have burnt that image to ashes! btw...r u joining Congress? r u planning to stand for elections? or do u hope to become the President of India with blessings from truthless chidambaram, senile pranab, mental manmohan singh and the italian barmaid sonia???