Back to rear-window economics

Questions need to be raised about the way the RBI looks at the data that forms the basis of its policy on interest rates. There are two major targets of policy: the achievement of potential growth, and low and stable inflation. The RBI has the unenviable job of balancing those objectives on behalf of the aam admi. Often, perhaps too often, I have commented upon the inappropriateness of using the wholesale price index as an indicator of inflation. Today, I will not comment on that drawback of RBI policy; but there are other problems.

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