The writer is assistant professor, Indira Gandhi Institute of Development Research
Rajeswari Sengupta writes: It could potentially erode the credibility of the inflation targeting framework
Rajeswari Sengupta writes: RBI's surprise move raises questions over its objective. Its mandate is to target inflation, not shore up rupee
Rajeswari Sengupta writes: Inflation is best addressed by the central bank using monetary policy, not by the government adjusting taxes
Buoyancy in tax revenues next year is uncertain and exports boom caused by pandemic is likely to diminish. In a period of global economic uncertainty, these will put constraints on GDP growth
Rajeswari Sengupta writes: There are serious problems with India’s GDP data. Any analysis of recovery or growth forecast based on this data must be taken with a handful of salt.
If the RBI is too slow to tighten policy and rein in the liquidity it has created, the country could end up facing the kind of inflation crisis that was witnessed in the post-2008 period.
Policymakers in all sophisticated economies face this trilemma, forcing them to make choices about which targets they are going to pursue.