INFLATION CONTROL

RBI Governor recently said that "he is responsible for the monetary policy of the country though, he would consult the ministry of Finance GoI and listen to them from time to time, however, the final call is his". Actually, no sensible Govt/ new Govt. would dispute the stand of his RBI Governor- when he is Raghuram Rajan. (no govt. would think of firing him in their dreams as he is one of the best). However, the issue of Inflation targeting should be seen by both the Governor of RBI and the Govt. of the day with a very fresh perspective. We need to concede now that monetary policy has its limitation to control inflation which is running above 8% now; as the Rural consumption pattern has under gone sea change, the area under cultivation of fruits and vegetables are under squeeze due to land acquisition for Roads, Rails and other Infra projects, counterfeit currencies are being dumped from abroad and manufactured inside the country in increasing numbers, Idle cash in rural areas remain untapped and their are other problems like money laundering and huge tax evasion that complicates the Inflation Story in India at present which can be solved when RBI and Govt. work in close co-ordination.