During a panel discussion yesterday in Indira Gandhi Institute for Development research (IGIDR), the RBI governor Subbarao gave the hint that RBI might be ready to have a rethink on its inflation target (between 4 to 5%), which under the current cincumstance looks quite far fetched.

Does this mean that the immense pressure being put on the RBI by the Finance Ministry is working, finally? Looks likely. Very clearly the govenrment and its govenrnace has been failing us. There's no hint of any real effort at fiscal consolidaiton except the fact that all and sundry from the ministry is talking only about plans and proposals. To me, these are nothing but verbal diarrhoea that makes me sick. RBI has all along been waging a lone battle and acting as some sort of impediment in the government's profligate ways. If this last bastion falls, inflation will come back to haunt us and - as it quite often happens - at the cost of growth.

Here's hoping that the RBI does actually stick to its guns and not cave in.

 


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