central bank should continue to bring inflation under the 5% mark.
“I don't think we should alter the indicative number very much beyond what we already have... I don't think there is a case for revising the inflation numbers," he said. “The dominant objective of the monetary policy should be to control inflation."
Rangarajan's successor Bimal Jalan had an interesting suggestion to Subbarao when he said RBI should do away with the notion that it alone is the fighter of inflation. “Don't take the responsibility that I am the monetary authority, therefore, I control inflation – you can't,” Jalan said.
Subbarao conceded the RBI's hawkish stance of targeting inflation by keeping interest rates elevated has attracted criticism from certain quarters that blame it for the massive drop in growth on the one side and not being able to arrest inflation so far. “To promote sustained growth, you need to have a low and stable inflation."
Citing anecdotes from town hall meetings he attends, Subbarao said the younger generation is more interested in growth while the older lot, especially from the middle class, wants price stability.
Subbarao also said he always asks his staff to be sensitive to the demographics of the country, which has a median age of 29, in policymaking and give a special focus to the aspirations of the youth.