dearness relief

Given the specter cast by inflation on India’s economic prospects, the Reserve Bank of India’s (RBI) relief estimate should count as bright news. In October, readings based on our benchmark consumer price index are likely to fall below 7%, according to Reserve Bank of India Governor Shaktikanta Das, who said this at the 20th Hindustan Times Leadership Summit on Saturday. While still high, the fall from earlier levels reflects our central bank’s expectation of tackling the problem by the next fiscal, which will not prove to be disappointing. Across the world, and particularly in the US, rising prices is making it harder for central banks to anticipate. The RBI has a wide target band of 2-6% inflation, which Das said needs no correction, which makes its job less difficult. Still, it would be impressive if it regains control of this important measure after three consecutive quarters of failure. But then, that is yet to happen. Policy makers in New Delhi can do their bit by reducing fiscal dominance that comes in the way of RBI’s monetary efforts. Overall, both the RBI and the Center should issue more than just words of assurance on their commitment to price stability. Let’s see it happens.