The Reserve Bank of India, the country’s paramount monetary authority, is to conduct its regular review of monetary and credit policy on Tuesday. On the face of it, there are several different actions which RBI governor Subbarao could announce. The policy rates could be raised sharply, or gently. There could be no change announced immediately, but the governor could indicate to observers, through his grave manner as he discusses inflationary pressure, that there might well be one before the end of the year. Or there might be no change. Or, of course, technically, monetary easing might be pushed forward, and the rates cut further.

But this apparent plethora of options in fact conceals a binary choice. Does the Reserve Bank believe that inflation is the concern that currently should be paramount? Or does it believe that the recovery of India’s growth path is the most pressing problem? And within that is a subsidiary question, equally relevant: which of those two things does the RBI actually think it has a shot at controlling? The truth is that, for all the concern that is justifiably being voiced over inflation, the source of that is food price inflation. Under no reasonable permutation of economic forces does a change in policy rates transfer with any efficiency into lower food prices, and thus affect the component of inflation that is causing political concern. Our vegetables, our meat and our cereals are more expensive for reasons that are mostly supply-specific. Short of a massive, counter-productive demand effect from a monetary contraction, food price inflation will not ease.

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