This refers to the column RBI might wait and watch (FE, May 30). With the imminent monetary policy review scheduled next week, the debate on changing policy rates has occupied all the pink papers space in recent days. Whether the policy rates would remain unchanged or not, let us recognise that the monetary policy changes has much less effect on inflation in the Indian context. This has already been proved during the UPA-2 regime when, in fact, RBI got into adverse publicity due to the stubborn policy stance taken by it and the raging inflation. Instead, the new government at the Centre should use budgetary instruments to contain the fiscal deficit arising from mounting subsidies. Further, the supply-side economics should get priority if food inflation has to be brought down immediately. Once food inflation subsides, there would be all-round multiplier effects among the people at the bottom of the pyramid. Here the food ministry (held by an NDA partner) has a big role to play. During the UPA-2 regime, the food ministry (again held by a UPA ally) did nothing to improve supply situation. Let us recognise that RBI cannot do anything on food inflation. In fact, RBI has advised the government on these lines but it fell into the previous government's deaf ears. The school of thought that gives importance to monetary policy instruments for controlling inflation has to take a back-seat in India. We cannot afford the academic debates that have damaged the real income of the poor people facing the practical market situations.
If the platitudes on good governance are sifted out, the 10-point agenda points to the priority the new government intends to give to big bang reforms and rapid economic growth. Most propositions in the framework do not provide the specifics to achieve tangible results. Homilies on the virtues of good governance make no difference to peoples lives. True, swayed by the promise of better days, people gave Narendra Modi a clear mandate to try his hand at good governance and development. But unfortunately in BJPs lexicon, these terms mean creation of more opportunities for Shining Indiathe privileged classes. It should be underlined here that India Inc that successfully marketed Modi and catapulted him to power would want him to act in their interest as the real power behind the throne. Since Modi knows where his strength lies and to whom he owes his office, he is likely to side with the corporate houses on any issue involving conflict of interest between them and the common people. Since his assumption of power, Modi has said or done nothing to indicate that he will break the mould of neo-liberal policies followed by the UPA government and criticised by him for the economic ruin. In his 10-point programme he has spelled out no plan to make a beginning to fulfil his pre-poll promise that the coming decade is going to be a decade of Dalits and destitutes. The worst of it all is that what Modi represents and supportsthe interests of the overdogwill push the people who overwhelmingly voted for him in the hope that he will do something about their dehumanising poverty into direr straits. The moment to watch out for how the powers-that-be come out with newer ways of keeping Modis appeal to the gullible masses undiminished will come when disenchantment sets in due to the inability to match promise with performance and transform lives.
G David Milton, Maruthancode, TN