Sir,
The recent repo rate cut by the RBI, as highlighted in “Growth Wins Over Inflation Fears” (March 5), is a welcome move that will boost economic growth and reduce borrowing costs. However, the rigid CPI-based inflation targeting policy raises concerns. While controlling inflation is crucial, monetary policy in a developing economy like India must also prioritize growth, employment, and poverty alleviation.
CPI inflation, heavily influenced by food prices, often reflects seasonal fluctuations rather than fundamental economic trends. Relying solely on CPI for policy decisions may lead to unnecessarily high interest rates, stifling growth. A more balanced approach—possibly integrating WPI and other economic indicators—could provide a fairer and more effective monetary policy.
As India aspires to be a $5 trillion economy, the RBI must adopt a dynamic policy that ensures price stability without compromising economic expansion. A rethink on inflation targeting is the need of the hour.
Pushpa Devi
Akhnoor
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