Can’t outsource to RBI

On the face of things, you can’t blame RBI for not cutting policy rates since, as it says, the government has done precious little to either remove supply-side constraints or to improve fiscal consolidation, both vital to keeping inflation under check. The fact that the government continues to dither over raising diesel prices, and didn’t allow oil PSUs to fully raise prices of even the decontrolled petrol for close to two years, makes it clear the year’s subsidy targets are going to be vastly exceeded—with GDP likely to be much lower than projected, and taxes commensurately lower, this is a certainty.

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