Goalposts shifted, RBI scores self-goals

The RBI kept interest rates close to the highest levels in modern Indian history on June 18. On cue, this quixotic policy was met by a chorus of support from the Sancho Panzas waiting in the wings. This shows that the RBI is independent, that Governor D. Subbarao did not give in to pressure, that he is continuing the good fight against inflation, and without much sacrifice against growth. Don’t be surprised if in the next few weeks Subbarao is compared to his mentor, C. Rangarajan, and both are compared to US Fed Chairman Paul Volcker’s hugely successful fight against inflation in the early 1980s.

Read Full Story>>