Business Standard

On high inflation, here is what RBI needs to tell govt: It is your fault

All the research since 1980 shows that loose fiscal policy causes inflation, and the RBI MPC needs to tell the govt just that


T C A Srinivasa-Raghavan
Like a schoolboy being asked to write an imposition, the RBI convened a meeting of the Monetary Policy Committee (MPC) on November 3 to discuss what it should say to the government as to why the inflation target has been missed. Ridiculous it may be, but that's the law.

I can tell the RBI what it should say to the government, that too in just nine words: "Dear government, it's all your fault. Yours truly, RBI."

Lest anyone think I am being facetious, all the research since 1980 shows that it's always the loose fiscal policy that causes inflation because
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Oct 31 2022 | 10:24 AM IST

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