Because we are different.

Not a difference of principle

11 November 2012

Issue 2 ~ Finance minister P Chidambaram and the RBI have different ideas about improving the country’s economic health

Difference of opinion on how to achieve a common objective is not a difference of principle. The objective is economic growth and taming of inflation. No two opinions on this can be attributed to finance minister or the RBI Governor. Controlling inflation and ensuring economic growth are both vital to the nation’s interest. The perception of the golden mean on how much inflation can be tolerated without stunting economic growth varies only in degrees between the finance minister and the RBI Governor. One should not read too much into the difference of perceptions between the two. Perhaps RBI is more cautions ~ as it should be ~ when it comes to controlling inflation while spurring economic growth. As far as the UPA II government is concerned, economic growth will pull down inflation after sometime and in the interregnum, it will not be unreasonable to tolerate a little higher level of inflation.
Fortunately, the need to curb inflation and encourage economic growth is acknowledged by both RBI and the government. The UPA II government, despite its numbers in the Lok Sabha, depends on the BSP and the SP to bail it out in times of crisis. Nevertheless, it has chosen to take unpopular decisions like opening up the retail sector to foreign direct investment. It’s so-called reformist decisions have made the people unhappy. Penny-pinching cannot become a nation’s way of life.
ps ponnuswami,
5 november, kolkata