RBI's Das & Co with Arjuna's eyes had many arrows to tame India's wild inflation rate
Indian economy grapples with the persistent challenge of inflation, the Reserve Bank of India (RBI) and the Monetary Policy Committee (MPC) have orchestrated a series of strategic measures throughout the 2023 calendar year. These actions, spanning policy changes and interest rate adjustments, reflect a proactive approach to maintaining economic stability while fostering sustainable growth.
Remember, RBI Governor Shaktikanta Das has often referred to keeping 'Arjuna's eyes' on galloping inflation rate that has singed consumers in India and kept policymakers busy in 2023.
Das has several times used the Arjuna analogy to clearly state that the RBI’s focus is to bring inflation to 4 per cent and not just within its tolerance band of 2-6 per cent. On most occasions, however, he has referred to ‘Arjuna’s eye’ as a means to drive home the inflation focus, without expanding its theme.
The year started with inflation hovering around 6.5 per cent, above the RBI's tolerance band of 2-6 per cent.
In the face of rising inflationary pressures, the RBI took the center stage in implementing measures designed to curb this economic menace.
Policy changes
One of the key pillars of the RBI and MPC's strategy in 2023 has been the implementation of targeted policy changes.
These adjustments aimed to fine-tune the monetary environment and address the root causes of inflation.
Notably, the central bank introduced a recalibration of the liquidity management framework.
This move, designed to enhance the effectiveness of monetary policy, allows for more nuanced control over liquidity in the banking system.
The rationale behind these policy changes lies in the recognition that managing inflation requires a holistic approach. By refining the
