Letter to BS: Govt measures must balance fiscal-monetary policy mismatch

The government will have to listen to the RBI's plea for supportive fiscal policy measures

This refers to the report “Retail inflation surges to 7.35% in Dec, a 5.5-yr high” (January 14). The next three weeks will see analyses of the reasons for overshooting the upper limit of the inflation target accepted by the Reserve Bank of India and the possible implications thereof on the February deliberations of the Monetary Policy Committee. It may be recalled that it was under the able leadership of Raghuram Rajan that the statutorisation of the Monetary Policy Committee happened and a conservative and flexible moving inflation target of 4 plus or minus 2 per cent with different milestones achievable