A fresh mandate for RBI

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Ila Patnaik Posted: Mar 20, 2007 at 0014 hrs IST

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Politically, this is a recipe for disaster. The attempt to keep Indian goods cheap for the American consumer has made Indian goods more expensive for the Indian consumer. Effectively the Indian consumer subsidises the American consumer. If we continue with the policy of trying to keep Indian goods cheap for foreigners, we will end up making them more expensive for Indians. Hiking interest rates will not tackle Inflation when the RBI continues taking with one hand and giving away with another. What India requires is to comprehensively open up questions of how monetary policy is conducted and give a fresh mandate to the RBI.

The writer is senior fellow, National Institute of Public Finance and Policy, New Delhi

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