Inflation Targeting For India

By Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa

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Policy that pursues stable prices, as has been economic common knowledge since Paul Volcker, is the anodyne for most all economic ills.

India’s consumer price inflation has been running high, around 10%, and needs to be attended to. India needs an inflation target between 4% and 5% and central bank policy to achieve it over the coming year even if it entails higher interest rates and a temporarily slowed economy.

The government must expand the investment base to raise the Indian economy’s potential growth rate while clamping down on inflation to ensure that money is allocated to its most productive uses, including foreign funds.

Price stability, a fully convertible floating rupee, and open capital markets will allow the Indian rupee to gain the international stature it deserves.


About Chandrashekar (Chandra) Tamirisa
This entry was posted in Economics, Monetary Policy, South Asia: India, Pakistan, Bangladesh, Nepal, Bhutan, Burma and Sri Lanka and tagged , . Bookmark the permalink.

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