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Ashok Kotwal
On demonetisation
Posted on: 23 Dec 2016
On the evening of 8 November, the Prime Minister announced on national television that Rs. ... read on »
A symposium on Piketty: Introduction
Posted on: 15 Jun 2015
Thomas Piketty’s book on ´Capital in the Twenty First Century’ has made waves. The f ... read on »
Emerging challenges: Economic and social
Posted on: 06 Aug 2014
To mark the second anniversary of I4I in July 2014, we invited two eminent scholars – Abhi ... read on »

Tag: inflation

Are grain procurement shocks inflationary?
Chetan Ghate , Sargam Gupta , Debdulal Mallick
Posted on: 17 Oct 2016

Central banks in emerging markets grapple with understanding the inflationary impact of grain procurement shocks because the precise link between the agriculture sector and the rest of the economy may not be well understood. This column presents a framework to understand how the government’s grain procurement policy in India can be inflationary, and what the appropriate monetary policy response should be.
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The tussle between RBI and Ministry of Finance: A different dimension
Gurbachan Singh
Posted on: 18 Aug 2016

The popular belief about the tussle between RBI and the Ministry of Finance is that it is an issue of the trade-off between inflation and economic growth, with the former more focussed on controlling high inflation and the latter emphasising high growth. However, according to Gurbachan Singh, there is a different dimension to the story; the Ministry doesn’t fully appreciate that RBI cannot ignore market forces while making announcements about interest rates.
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Fiscal deficit and growth slowdown
Gurbachan Singh
Posted on: 17 Feb 2016

Ahead of the Union Budget, several policymakers and economists in India have advocated increasing public spending to spur economic growth. In this article, Gurbachan Singh argues that even if India is facing a slowdown, a larger fiscal deficit is not the solution – more so now that RBI and the government have adopted inflation targeting. The prospect of a fiscal crisis may be farfetched but India may be incurring costs differently.
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Charting a course for the Indian economy
Karthik Muralidharan , Arvind Subramanian
Posted on: 05 Aug 2015

Karthik Muralidharan (Associate Professor of Economics, University of California, San Diego) speaks with Arvind Subramanian (Chief Economic Adviser, Government of India) on a broad set of issues ranging from the uniqueness of the Indian development model, the political economy of reforms, reducing factor misallocation in the economy, enhancing State capacity, financing India´s infrastructure needs, to the implications of the Fourteenth Finance Commission, improving the design of social welfare programmes, and climate change.

This is the third in the series of I4I Conversations.

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The nuances of inflation targeting in India
Abhijit Sen Gupta , Rajeswari Sengupta
Posted on: 16 Mar 2015

How prepared is India for inflation targeting? This column suggests that the larger weight assigned by the RBI to tackling inflation over the years, relative to other policy objectives such as stabilising exchange rates, places it in a good position to make the transition to the new regime. However, limited control over supply shocks that impact inflation might continue to pose a challenge. Greater coordination between fiscal and monetary policy would improve the efficacy of inflation targeting.
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Targeting nominal GDP
Pranjul Bhandari , Jeffrey Frankel
Posted on: 08 Jan 2015

Central banks, especially in developing countries, still seek transparent and credible communication. Yet signalling intentions in the conduct of monetary policy sometimes creates undesirable constraints. This column argues that it may be better to phrase central bank pronouncements in terms of nominal GDP, rather than in terms of inflation. If it is worth communicating a plan, it is worth choosing a plan that one can live with.
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India’s macroeconomic outlook
Eswar Prasad
Posted on: 16 Dec 2014

With falling inflation, high forex reserves and the new government embarking on a broad reform agenda, things seem to be looking up for India. In this article, Eswar Prasad shares his macroeconomic outlook for the economy. He provides his perspective on foreign inflows, disinvestment, fiscal position, the reform agenda, and escaping the low-growth trap.
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Should India embrace inflation targeting?
Iyanatul Islam
Posted on: 12 Dec 2014

The Urjit Patel Committee recommended the formal adoption of an inflation targeting regime for India. In this article, Iyanatul Islam compares the views of the current RBI Governor with those of his predecessor on controlling inflation. He concludes that, at this stage, the incremental gains for the RBI from fully embracing inflation targeting are likely to be rather modest.
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Keys to successful reform in India
Eswar Prasad
Posted on: 09 Jul 2014

The new Indian government’s first budget - due to be unveiled this week – will be an important indicator of how forcefully the new PM intends to translate his mandate of putting India’s economy back on track into effective actions. This article contends that both strategy and specifics will be crucial for this budget to effectively kick-start economic reforms.
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Inflation targeting in India: Right and wrong
Gurbachan Singh
Posted on: 31 Jan 2014

An RBI-appointed Expert Committee has recommended targeting a 4% inflation rate, but allowing it to vary between 2% and 6%. This column takes a different position on the target and leeway. It argues that achieving truly low and stable inflation alongside macroeconomic stability is not as difficult as is usually made out to be, if the right policies are in place.
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India´s unique crisis – a short term fix
Devesh Kapur , Arvind Subramanian
Posted on: 20 Dec 2013

While the current turbulence in the Indian economy bears a resemblance to the situation of other emerging economies, it is unique when compared with historical experiences of economic crises. In their previous article, Kapur and Subramanian discussed the misdiagnosis of India’s crisis, and consequent errors in policy remedies. In this part, they outline short-term actions for reversing the growth slowdown, reducing current account deficit and preventing inflation.
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India´s unique crisis
Devesh Kapur , Arvind Subramanian
Posted on: 16 Dec 2013

While the current turbulence in the Indian economy bears a resemblance to the situation of other emerging economies, it is unique when compared with historical experiences of economic crises. In the first of a two-part article, Kapur and Subramanian discuss the misdiagnoses of India’s crisis, and the consequent errors in policy remedies. In the next part, the authors provide a short-term solution for India’s unique crisis.
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What is mitigating a financial crisis in India?
Gurbachan Singh
Posted on: 08 Nov 2013

The recent turmoil in the currency market and the general slowdown in growth in India are disturbing. However, India has by and large performed better in terms of macro-financial stability as compared to many parts of the world. This column discusses the problems confronting policymakers, and current policy responses and associated costs, and suggests alternative policies.
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Long term recovery of the Indian economy depends on reforms
Sarah Chan
Posted on: 24 Apr 2013

The Indian economy has been facing challenges in the form of sluggish growth, high inflation, and rising fiscal and current account deficits. This column highlights trends in the economic conditions, and outlines policy actions and reforms needed to put the economy back on track.
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Understanding India’s monetary policy
Rajeswari Sengupta , Nirvikar Singh
Posted on: 21 Dec 2012

From the outside looking in, it may seem that India’s central bank is making up its own rules, making it difficult to predict the next movements in the interest rate. This column argues that the central bank is in fact following a rule, you just have to look hard enough.
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Monetary policy in India and other developing countries
Prachi Mishra , Peter Montiel
Posted on: 03 Sep 2012

Setting interest rates and controlling inflation is an altogether different challenge in countries like India. This column argues that in many developing countries, the financial system is still too underdeveloped for monetary policy to have a reliable effect on the economy, raising doubts over several of today’s policies.
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