•My guest this week is an editor, author and economist, apart from being my friend and guide. Circumstances have changed quite a lot since we spoke last.

Thank you. There were great success stories. And the Maruti issues were oversubscribed 70 times. It has been a great success after that.

•There is so much talk about buying us out of the market or selling us out of the market.

It is one of those ‘deaths foretold’. In the sense that for one-and-a-half years, many of us have been saying that the way the Government is handling things — especially the complete stoppage of reforms for the entire period — can lead to problems in production. Then, the problem of inflation would arise, compounded by the fiscal profligacy of the government. The populist policy in which there was no accountability and then to rein in inflation is like trying to use the axe of monetary policy to swat a fly.

•When the successive round of tightening and raising of rates happened, the then Reserve Bank of India (RBI) governor Y V Reddy was asked in a press conference : “why you are making money expensive?” He said, “If dal and rice have become dearer why should the rupee not become more expensive?”

We are seeing the consequence today. Raising interest rates does not bring down the prices of dal and chawal. What happens is you further constrain production. One of the great achievements of Yashwant Sinha was that the administered interest rate was brought down to 6 per cent from 12.5 per cent.

... contd.