If I were RBI governor...

MONETARY POLICY 2008-09

I would repair to my wonderful terrace ambivalent about the upcoming end of my tenure "� on the one hand, I will have to leave this lovely place; on the other, I would be through with the structurally thankless task of serving two masters: the market and the government.

Although, even if I say so myself, I think we have, over the past few years, begun to express our independence more effectively. Indeed, my good friend, Jamal Mecklai, told me that at a seminar just before the credit policy he took a poll and less than 50% of the audience believed I would raise rates out of political "� must be seen to do something "� considerations. I hope they were properly chastised when I did not raise rates. While few may believe it, I have always acted in what I felt was the economically prudent way, whether or not it coincided with what was politically prudent. I guess I should be heartened that such a "small" percentage today believes I would act purely for political reasons "� I dare say, that number would have been closer to 80% when I first came into office.

And I think that kudos deserves a drink "� perhaps a cinzano and tonic, considering how hot it is. Mmmm... good!

I guess this means the mangos will be excellent this year and, fingers crossed, the rains will be good as well. But this inflation stuff "� boy, it is a trick to manage!

Even if the dollar strengthens and commodity prices start to ease in the second half, I don't see oil prices coming down substantively. There seems to be something almost Biblical at play there. And, the trouble is that since oil finds its way into virtually everything, inflation may not come down too much and, horror of horrors, may remain above our target for most of the year.

But I'm not going to stamp on growth. While, more than in developed countries, we need to keep a tight lid on inflation, I think "� hope, really "� that even 6-6.5% may not be much worse in impact than 5-5.5%, and if we can get growth back up above 8.5%, it will be worth it.

Another drink "� and a toast to my successor, who will doubtless see more structural reform from Delhi. May the worst of his (or her?) problems be choosing between sub 5% inflation and 10+% growth.