VITALINFO: Rethinking Fiscal and Monetary Policies - M.G.Warr...

VITALINFO: Rethinking Fiscal and Monetary Policies - M.G.Warr...: .............
The best conclusion for this article could be a recent quote from my former colleague Dr. Charan Singh who is now the RBI Chair Professor of Economics at the Indian Institute of Management, Bangalore:
“Historically, inflation targeting has been generally adopted by countries recording hyperinflation. In India, that has never been the case. Therefore, inflicting such high interest rates on the Indian public in the name of combating inflation has only resulted in lower investment and growth, and higher non-performing assets. In view of the young population
of India, our priorities should probably be on ensuring higher employment and growth and not just low inflation.” Without disagreeing, I would add that inflation need to be maintained at tolerable levels, to maintain stability in cost of living for those who do not have ‘savings’ to fall upon to subsidise expenses as prices fluctuate to their disadvantage! The managers of fiscal and monetary policy cannot be blamed as inflation is only one of the indicators that tell them the results of various fiscal and monetary policy measures they initiate. Depending on the direction they look, they are always able to either venture an optimistic prediction or tell us where either of them need correct the next step. Rethinking Fiscal and Monetary Policies.



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