Growth blame game: Why lay a deeper economic malaise at RBI’s door?
Subscribe to enjoy similar stories. Chapter 16 in the Book of Leviticus, Old Testament, enjoins Aaron (brother of Moses) to organize sacrifices and expiate the sins of all Israelites. The process involves, over and above the ritual sacrifice of a bull and a ram, the community of Israelites providing Aaron with a goat; Aaron is supposed to lay both his hands over the goat’s head and confess to all the sins of Israelites.
This goat, with all the Israelite sins now laid on its head, is then sent out into the desert to forever bear the community’s guilt and suffer desolation in a barren landscape. Thence was born the concept of a scapegoat. Almost 2,500 years later, in present day India, the political and industrial classes seem to have put their hands on the head of Reserve Bank of India (RBI) and cursed it to forever bear the cross of all economic ills, regardless of where they originate.
All eyes are on newly appointed RBI Governor Sanjay Malhotra to see how he adjusts to life at the head of an organization that has become the favourite punching bag for politicians. Various ministers, government officials and sundry industry representatives have been hinting of RBI culpability in India’s economic slowdown. Disingenuously, India’s slowing growth impulses are being attributed mainly to RBI’s interest rate regime to the exclusion of all other issues.
The artifice began with this year’s Economic Survey claiming that the flexible inflation targeting (FIT) framework should not target headline inflation, but focus on inflation that excludes food prices. Both Union commerce minister Piyush Goyal and finance minister Nirmala Sitharaman have since then made demands for policy rate cuts and endorsed the Survey’s suggestion. An
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