Business Standard

Time to improve the fiscal architecture

To chip away at the fiscal dominance of monetary policy, it is important to focus on institutional design and process improvements



A Prasanna
The critics of the Reserve Bank of India’s (RBI) monetary policy fall in two camps. One camp casts monetary policy as powerless while the other side vests it with omnipotent powers. Needless to say, both the camps get it only partly right. The missing piece is the fiscal dominance of monetary policy.

In economics, fiscal dominance has a specific connotation and it may seem odd to talk about it when the key macro indicators are within bounds. CPI inflation has averaged less than 4 per cent over last four years and general government deficit has fallen by nearly 1 per
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jan 31 2019 | 8:33 PM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on are available only to BS Premium subscribers.

Register to