Column : RBI, heal thyself
A sad aspect of recent economic policy in India was that the practice of self-destructive populism at the finance ministry prior to September 2012 allowed RBI, and other advisers and agents of the government, to practice sloppy analysis, and indulge in even sloppier policy recommendations. Worse, they could bathe themselves in contradictions and still not be held “accountable”. It was a win-win situation for most such advisers. If the policy worked, they could take the credit. If the policy did not work, they could point to policy paralysis, bad investor sentiment created by retrospective tax amendments, etc. In other words, there was plenty to point fingers at, and no role for any action besides the lazily obvious.
Since September 12, 2012, the fiscal policy has changed markedly for the better. Policy paralysis nightmare at the Centre is over. On Tuesday, RBI reduced repo rates for the first time since April 2012, and did so by the minimum tradition allowed—25 basis points. The relevant question