Urjit Patel on Inflation

Here are some bon mots from our new Dy. Governor of the RBI:

“Assertions that imported inflation and external developments — like global excess liquidity — lie at the root of price developments in India ring hollow.”

“What is clear is that persistence of elevated inflation is agreeable to some policymakers.The authorities want to take credit for India’s growth performance but stay blameless on the price front — a case of heads I win, tails you lose!”

“This is an astonishing series of nihilistic statements — unassisted by evidence or even a hint of scientific thoroughness — from the central bank head pleading either hopelessness on account of India being a large and diverse federal entity, or, a form of muddled eclecticism.”

“The profligacy of the central government has its primary driver in populist spending policies initiated in early 2008 by the ruling coalition leading up to national elections in May 2009.”

“Three stimulus packages (including a reduction in indirect tax rates) starting in late 2008 to counter the global recessionary head winds only accentuated matters.”

“If gold prices stay elevated or increase going forward, and wealth effects emanating from this externally generated feature are quantitatively important, than monetary policy has that much more work to do to tame inflation.”

These are heartening words indeed for those of us concerned about the detrimental effects of our persistently high inflation even as growth prospects have muted.