Some legitimate concerns have been raised about whether our inflation target should include volatile components of inflation like vegetables and other foods. In reality, the RBI (Reserve Bank of India) has typically looked through such volatility in setting policy rates. Even in the new inflation framework, the inflation target has to be breached three quarters in a row for the Monetary Policy Committee (MPC) to have to explain its failure. Volatile components like vegetables tend to be smoothed over three quarters. At the same time, it is not reasonable to drop food entirely from the target index. It is the single most important consumption category for most Indians still. Moreover, as Indians get richer, there are some structural shifts in consumption patterns that are reflected in higher prices for favoured items. It would not be appropriate to ignore these structural shifts and the need for associated supply responses. It is heartening that after years of high pulse inflation, we a

It's easy to ignore loan loss problem

Business Standard

Non-bank entities are providing innovative payment products and services, forcing banks to reflect upon their strategy - to compete or to collaborate?

Payment services no longer the monopoly of banks

The world has become increasingly interdependent, with the strengthening of economic and financial linkages within geographic regions and across regions

SAARC continues to be resilient amid turbulence

RBI has been adopting more liberal attitudes towards bank licensing, towards financial inclusion, & towards payment technologies in order to foster growth

'Being unorthodox on microeconomic policy is better'

In a very interesting recent book, Harvard philosopher Michael Sandel points to the range of things money can buy in modern society. He seems to want to make us angry at the growing dominance of the market. Professor Sandel worries not just about the corrupting nature of some exchanges as they are monetised but also questions their effectiveness; For instance, do kids really develop a love of reading if they are bribed to read books? He is also concerned about unequal access to money, which makes trades using money inherently unequal. More generally, Sandel fears that the expansion of anonymous monetary exchange breaks down social cohesion, and argues for reducing money's role in society.While Sandel's concerns are not entirely new, his examples are worth reflecting on. For instance, some companies pay the unemployed to stand in line for free public tickets to Congressional hearings in the United States. They then sell the tickets to lobbyists and corporate lawyers, who have a business

Let us increase society's tolerance to the use of money

Because he is focusing only on the nominal interest he gets and not on the underlying inflation which has come down even more sharply, from about 10% to 5.5%

The retiree is better off today than before

Full text of RBI Governor Raghuram Rajan's speech at the Third Dr. Verghese Kurien Memorial Lecture at IRMA, Anand on November 25, 2014

Raghuram Rajan: Large wilful promoter defaults robs taxpayers | Business Standard News

Sixty seven years is a long time in the life of man - indeed, it is about the average Indian's life expectancy today. Since life expectancy was shorter at the time of Independence, it is safe to say that most Indians born just after independence are now no more. It is useful to take stock at such a time. Did we achieve the dreams of our founding fathers for freedom's first children? Or have we fallen woefully short?Our founding fathers wanted political freedom for the people of India. They wanted justice and equality, of status and opportunity. And they wanted us to be free from poverty. We have made substantial progress in achieving political freedom. Our democracy has matured, with people confidently choosing to vote out governments that lose touch with their needs.Even as our democracy and our economy have become more vibrant, an important issue in the recent election was whether we had substituted the crony socialism of the past with crony capitalism, where the rich and the influen

The five P's of financial inclusion

Both advanced economies and emerging economies need to adapt, else I fear we are about to embark on the next leg of a wearisome cycle