Inflation Targeting and Monetary Stability Policy in India

 

MONETARY STABILITY

AND INFLATION MANAGEMENT POLICY FOR INDIA

 

SUBHASH CHANDRA GARG

Economic, Finance and Fiscal Policy Strategist and Former Finance and Economic Affairs Secretary, Government of India

 

Fiat Currency Incubated Monetary Instability 

Every good and service produced and consumed in an economy gets exchanged/traded at a value/price expressed in terms of the money. As long as the gold/silver, valuable goods in itself, doubled up as currency, the role of money in the exchange of other goods and services was quite straight forward. All goods and services were valued relative to the value of the gold/silver and the gold/silver coin acted as a stable medium of exchange. There was no notable instability in the value of money. There was no need for any ‘monetary policy’ to control inflation and maintain value of money.

Similar stability of money continued to exist when the paper currency notes were introduced as money but were kept aligned to the value of gold/silver by being freely convertible in gold/silver coins. In the era of gold/silver currency or even when gold/silver standard was prevailing, it did not matter which country’s gold/silver coin/note was used, as every coin/note was exchanged for the quantity of pure gold or silver or both in it and there was a stable exchange ratio between gold and silver.

Much of the global currency system until 1960s operated on this basis, including during the Bretton woods era as every currency was expressed to be equivalent to a certain weight in gold and its’ relative value to US dollar was fixed accordingly.  The fact that the US dollar was convertible in gold at a fixed ratio of $35 to an ounce of gold made all international currencies virtually convertible in gold. 

When the countries after countries went off the gold/silver standard and the US refused to convert 35 US dollars in one ounce of gold in 1971 and it was only the paper currency left to discharge the function of money, the situation got quite complicated. The paper currency, whether dollars, sterling or rupees, not backed by gold/silver, had no value of its own. It became necessary to determine the real monetary value of the currency issued and maintain the stability of that value for the currency to continue to function as currency/money.

A big era of inflation ensued starting in late 1960s. The US had more than 25 years of acute inflation until early 1990s. All over the world, this phenomenon was played out. India also had the worst of inflation in 1970s, 1980s and 1990s. Inflation and the stability of money became the big policy problem.

The run-away inflation caused unprecedented harm to growth and employment, which made the policy makers worried about inflation. The Monetarists in seventies reasoned convincingly that the stability in the value of money could be achieved by controlling the excessive quantum of money. Inflation targeting became the policy choice all over the world. India also adopted inflation targeting formally as the monetary policy instrument in 2015. Besides a few other structural factors, the monetary management under the inflation targeting regime ensured containing the inflation demon in most parts of the world.

In the paper currency era, the monetary stability and inflation management are the biggest policy issues.

Aggregate of Currency Supply and Bank Deposits is  the ‘Money’

Economic agents, whether producers or consumers, hold currency with them to undertake transactions, make payments and transfers and to retain with them to be used in future as purchasing power. The economic agents can also keep the currency with banks as deposits to be drawn and used when needed. The Central Bank issues the currency and usually manage the circulation of currency through banks. All the currencies with the public and banks literally constitute total stock of money.

There are three levels of this stock of money.

First, the paper currency held by people (which includes all non-monetary institutions whether individuals, unincorporated firms, companies etc.). This is referred to as the currency held by people, to which if the currency held by the banks is added, it becomes the currency in circulation. 

Second, the central bank or the monetary authority, is liable to provide currency to banks and other institutions which keep deposits with it. The currency held by the people and banks i.e. the currency in circulation plus the deposits of banks with the central bank, usually called the reserve money, becomes the second kind of the stock of money. 

Third, currency in circulation and all the deposits held by people in the banks together is the total stock of money. This is the broadest measure of the stock of money. There are, however, different kinds of deposits in terms of the relationship between the depositor and the bank. Some deposits can be payable on demand. Others may be payable only after a particular term of time. If one differentiates deposits in terms of it being demanded, there can be different variation of broad money stock. These are also described in terms of M1, M2, M3 and sometimes M4 also.

As the digitalisation spread, the rigidity in terms of using deposits for payments has got increasingly eliminated. The savings accounts of today are literally current accounts in the hands of saving account holders. The currency held by the public and total deposits kept by public in the banks is effectively the total stock of money.

The total stock of money can be used to make payments for goods and services produced and exchanged in the economy. The money is currency. It circulates. Over a period of time, the currency coins and notes and bank deposits can get used many times over. The frequency of use of currency in economies differ on account of several factors. If some currency gets stashed away, that much currency effectively does not circulate. If some coins become debased, these go out of circulation. Term deposits with banks with stiffer penalties or in non-electronic mode are unlikely to get used for payments. The ratio of gross domestic product (which represents the total value of goods and services produced and exchanged) and the stock of money broadly represents the velocity of circulation of money.

The value and the stability of the value of money depend upon the interplay of these three broad measures- the value of goods and services produced and consumed or the GDP, the currency held and deposits made by the public in banks or the stock of money and the velocity of money.

Inflation is essentially the measure of the reduction in the value of money. If the money stock goes up without increase in GDP or lesser increase in GDP with the velocity of money remaining unchanged, the economy would witness inflation to bring back equilibrium in the equation. If the money stock goes up and the GDP also goes up correspondingly without the velocity of money changing, there is unlikely to be any inflation. If the stock of money goes up but the velocity of money comes down correspondingly, even if there is no change in GDP, there is unlikely to be any inflation.

Currency Notes Make Up 1/7^th of Money in India

At the end of the financial year 2019-20, total ‘Currency-In-Circulation’ or CIC was Rs. 24.47 lakh crores. Of this, Rs. .98 lakh crore was in the form of cash with banks. Therefore, the Currency with the Public was Rs. 23.50 lakh crores.

At the end of FY 2019-20, the banks held Rs. 5.44 lakh crores as Bankers’ Deposits with the RBI, largely to comply with the obligation of Cash Reserve Ratio. In addition, there were “Other Deposits’ with the RBI amounting to Rs. .39 lakh crores. These two types of deposits with RBI added to the currency in circulation, amounting to Rs. 30.30 lakh crore, was the stock of Reserve Money in India.

Finally, the ‘Demand Deposits’ i.e. deposits which the depositor can withdraw anytime without any notice to the banks, mostly the balances in current account were Rs. 17.38 lakh crore and the ‘Time Deposits’ i.e. the deposits which can be usually withdrawn only at the end of the term, mostly known as the Fixed Deposits, were Rs. 126.74 lakh crores.

The broad money is a measure of currency and deposits of the public. This measure excludes the cash held by the banks and the deposits of banks with the RBI. The narrow measure of money is currency with the public and the demand deposits (the other deposits with the RBI are also added). The measure of broad money adds the term deposits to the narrow money.

The narrow money in India (also referred as M1) at the end of financial year 2019-20 was Rs. 41.26 lakh crores and the broad money (also referred as M3) was Rs. 167.80 lakh crores. The currency notes with public at Rs. 23.50 lakh crore made up approximately 1/7^th of the broad money stock of Rs. 167.80 lakh crore at the end of financial year 2019-20.

Velocity of Money Does Not Remain Constant

Money is used to make payments for goods traded or services availed. If all the payments made in a year are added and the number is divided by the stock of money, one gets the velocity of money in an economy. As crores of payments are made every day in numerous cash and digital modes (UPI alone is used to make more than 175 crore payments a month in India), it is difficult to add up all the payments. The GDP is an inaccurate but closer proxy for value of goods and services paid for and therefore ratio of GDP to stock of money works as a rough estimate of the velocity of money in an economy.

With India’s nominal GDP being Rs. 203 lakh crores in 2019-20, as per the crude measure of money velocity i.e. GDP in nominal terms divided by the broad money, the velocity of money in India was a low 1.21 in 2019-20. In effect, the GDP measures total value added, whereas transactions take place for all the inputs and outputs, which is a multiple of the value added. The real velocity would be much higher.

For numerous reasons, the velocity of money is coming down all over the world. It is most noticeable in the advanced countries. Even in India, the velocity of money is trending lower.

It is not only the quantum of increase in money supply relative to the increase in GDP which matters for inflation, but also the changes in velocity of money. If the quantum of money goes up but the velocity correspondingly goes down, there is likely to be no impact of increased money supply on inflation, other things being equal.

Post Keynes Employment Creation by Monetary Expansion Became Fiscal Policy Favourite

The great depression of 1930s killed growth and employment.

The US economy is estimated to have contracted by about 30% between 1929 and 1933 and employment contracted by about 20%. It was misery all over as 20% of the workers lost their jobs. Many other economies, including the UK, also experienced severe depression.

Keynes proposed that employment could be expanded if the Government expands fiscal expenditures to pay for the cost of labour to expand the economy. The fiscal expenditures could be financed by printing more money. This worked. The employment expanded. Growth also came back. A painless magical instrument came in the hands of policy makers. Keynes ruled all over the world and still has many adherents.

The real solution, however, degenerated over time. Fiscal expenditures expanded by printing of money did not yield growth. It yielded only inflation in many cases. Chasing illusory growth and employment, the fiscal deficits expanded. Monetisation of fiscal deficits became norm all over the world. Soon, the excess of money supply/ monetisation of deficits resulted in inflation spreading all over. Too much money was chasing too few goods and services. Double digit inflation was the order of the day. Some countries saw inflation rising beyond 100%. Inflation is a tax on poor. Labour has the least ability to neutralise the impact of inflation. Households real incomes went down. There was misery all around caused by evaporation of the real incomes.

Phillips Curve Provided False Justification of Inflation as a Necessary Cost of Employment

Phillips, another economist from UK, after studying the phenomenon of inflation, devised a curve, known for last 60 years as the Phillips Curve, which depicted the argument that there was an inverse relationship between unemployment and inflation- lesser the unemployment, higher the inflation. He effectively told the policy makers not to worry about inflation as it was a necessary cost to eliminate unemployment.

For the period of his study 1861-1957, the inflation in general was quite low thanks to gold/silver standard ensuring constrained money supply. The adoption of fiat currency removed the restraint on money supply. Inflation also did not seem to work effectively to create growth and employment for various reasons, including high inflation expectations becoming a permanent kind of phenomenon.

While inflation raged in 1970s and 1980s, unemployment also soared. The relationship of unemployment and inflation, instead of being inverse as postulated by Phillips, became direct. More inflation led to more unemployment. Keynesian solution and Phillips justification both lost their justification. For policy makers, the lure of monetary expansion-based expansion of public expenditure was too intoxicating a brew, but by the late 1980s, it was becoming clear to them that the party could not go on last forever. Monetary expansion was not the free lunch.

India also unleashed the monetary purse beginning in 1955. The Government of India effectively directed and the Reserve Bank of India meekly complied to provide unrestrained credit to the Government of India. The mechanism was simple but lethal. The Government of India would issue ad-hoc treasury bills on RBI and RBI would put equal amount in the account of the Government of India. The unproductivity of a lot of expenditure ensured that there was no commensurate growth pick up. Inflation was the manifestation of unproductive expenditure and excessive monetary expansion. In October 1974, India recorded inflation of 34.7%.

“Inflation is Always and Everywhere a Monetary Phenomenon”

Milton Friedman, the monetarist, pointed out the obvious connection between the excessive money supply and the inflation. He famously said “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output”.

Inflation’s bad effect on growth and employment begun to outweigh its lure of expanding public expenditure by using easy money. Friedman’s theory provided a perfect understanding of why the runaway monetary expansion was the culprit for inflation.

Paul Volker took charge of US Fed in 1979 when consumer price inflation was 13%. He recognised the reasons of raging inflation in the United States in 1980s and pursued a policy of controlling credit expansion and money supply by raising Fed’s benchmark interest rates. Interest rates were raised to record high of 20%. Inflation came under control- less than 5%- in the US.

Inflation was everywhere. Inflation targeting i.e. to bring down inflation to tolerable levels became the policy choice all over the world.  The era of inflation targeting by restraining the money supply commenced. New Zealand was the first country to formally adopt inflation targeting in 1990. Canada followed suit soon. Others did so over next 25 years. India also adopted inflation, though not formally, in late 1990s. Formally, India adopted inflation targeting framework in 2015 mandating the RBI to maintain consumer price inflation in the corridor of 2%-6%.

Inflation targeting frameworks succeeded. Other factors like ageing of societies leading to demand stagnation, increase in production of goods and services making supply of many goods in excess of demand, constant productivity increase in production and cost of services thanks to digitalisation also helped. Inflation is not a major global concern these days, barring a few rogue states. In some countries, the lack of inflation is. 

Currently Inflation in Manufactured Products is Quite Subdued in India

The wholesale price index number of manufactured products rose from 121.9 in 1972-73 to 270.6 in 1981-82, a simple average of 14.87% a year. The same wholesale price index number in the next series rose from 103.5 in 1982-83 to 243.2 in 1993-94, at the rate of simple annual average of 11.64%. The inflation in manufactured products was quite high in India in 1970s and 1980s.

The moderation started somewhere in early 1990s. The wholesale index number (1993-94 base series) rose from 112.3 in 1994-95 to 166.3 in 2004-05 registering a simple annual increase of 4.91%. The same type of moderation was noticed in next series (base 2004-05) when the wholesale price index rose from 102.4 in 2005-06 to 139.5 in 2011-12, recording a rise of 5.3% annually. The inflation in manufactured products collapsed in 2010s with the wholesale price index increasing from 105.3 in 2012-13 to only 118.3 in 2019-20, an annual increase of 1.62% only.

India is still young. It is nowhere close to ageing. There is every reason to believe that consumption and investment demand in India must rise in double digits. However, global supply excess in many commodities and scaling up of production capacities in many manufactured goods have seen shortages of manufactured products disappear from India. For manufactured products, there is no real inflation issue in the country.

GDP deflator which measures economy wide inflation or the inflation in the value of all the goods and services produced and consumed in the economy is also relatively quite low. It rose from 100 in 2012 (the 2011-12 series) to 138.8 in 2020 rising by an average of 4.3%.

Overweighted Food in Consumer Price Index Creates False Impression of High and Volatile Inflation in India

Consumer Price Index- Combined (CPI-C), started in January 2011, is a composite all India consumers price index. Earlier, there were consumer price indices for some specific segments of consumers like industrial workers, agriculture labourers and so on. The inflation target, given as a legislative mandate for RBI in 2015, is also set in terms of CPI-Combined.

CPI-C rose from 93.3 in 2011-12 to 146.3 in 2019-20, registering an annual increase of 5.9%, way above the average annual increase of 1.62% recorded in the wholesale price index or 4.3% in the GDP deflator. Does CPI-C represent right inflation in India? Which index represents inflation more accurately in India?

The CPI-C for August 2020 is 154.7 and the CPI-C for Food or CFPI-C is 157.8. There is not much difference in food and overall index if we measure price movements over a longer period of 8 years. There is also a remarkable convergence in the five groups of CPI-C. Food and Beverages index for August 2020 is 158, for Clothing and Footwear it is 152, for Housing it is 156.3, for Fuel and Light it is 142.8 and for Miscellaneous (which is basically for some specific Services) it is 150. There are only three outliers- Meat and Fish at 187.1, Vegetables at 186.5 and Pan, Tobacco and Intoxicants at 184.4.

The CPI-C represents a much lower proportion of goods and services produced and consumed in India. Therefore, it is not really a good measure of inflation of overall consumption in the country. It also does not represent inflation in investment goods. Moreover, the CPI-C gives excessive weight to food and beverages (54.18%). The food items are also quite volatile as well, especially the vegetables. The CPI-C is the wrong index to target in India’s effort to control inflation.

As CPI-C design systemically over project inflation, RBI also has to over-react to control inflation. Unfortunately, the monetary actions of RBI cannot effectively target inflation in food items. It ends up depressing the prices of manufactured goods and over-all price levels in the country. This makes India’s efforts to achieve monetary stability by targeting inflation has proved to be quite a poor exercise. 

Collapse of Inflation in Advanced Countries Has Made Monetarist Theory Fall Flat

Japan entered in no-inflation territory in early 1990s. Most of Europe has not seen inflation of more than 2% in 21^st century. Americans have for many years set 2% as minimum inflation target but have not succeeded for two decades despite adopting all kinds of quantitative easing and ballooning of US Fed Balance Sheet. Over 3 trillion of money/reserves has been injected in the US post Covid-19 outbreak and the supply chains collapsed for some time, yet there is no sign of inflation. US Fed has now adopted average of 2% as inflation target.

Massive monetary expansion in developed countries should have, as per monetarist theories, resulted in runaway inflation, but it has not. There are three principal reasons for collapse of inflation in developed countries.

First, a very stable and longer-term demand and supply equilibrium, in which supplies are somewhat more than the demand for a variety of reasons- demographic change, construction of infrastructure, global integration- has taken winds out of the sails or the pricing power from the suppliers. Suppliers are just not in a position to increase prices for most of the goods and services.

Second, integration of global supply chains, global trade, massive reduction in transportation costs, rush of interest rates towards zero and e-commerce push have imparted a major downward cost push resulting into lowering of producers/suppliers cost of production and distribution which have protected corporate profits while at the same time reducing consumers’ costs.

Third, increasingly the household and corporate savings, including monetary and credit expansion, are feeding into asset prices, in place of consumption and investment, leaving very little or no impact of monetary expansion on inflation.

Developing countries, when these move in upper middle income or high- income brackets, start exhibiting the same tendencies. In any case supply demand equilibrium is taking place at global level in many commodities and the advantages of cost reduction are also available to many developing countries. It is only the leaking of monetary expansion in wealth instead of raising prices is lesser in the developing countries.

The inflation is no longer, in most part of the world, a monetary phenomenon as Freidman wanted us to believe. Circumstances change, theories also have to change. In most countries today, monetary expansion does not any longer cause rise in prices of goods and services. Instead, it feeds only in raising the wealth/assets prices. 

Modern Monetary Theory (MMT) is Only Repackaged Keynesian Stimulus

A number of economists, most actively in the United States, are arguing that the Governments, especially the currency issuing advanced country sovereigns, can monetise as much deficit as necessary for financing full employment or for serving any other public policy objective- e.g. health for all or old age social security etc.- without worrying about fiscal deficits so long as such fiscal expenditure expansion does not result in inflation.

Most of the advanced/ high income countries have not witnessed inflation despite their central banks using all sorts of monetary tools- driving down interest rates close to zero, quantitative easing, purchase of private corporate bonds, expanding the central bank balance sheet, managing the interest rate curve and the like. The MMT theorists believe that stimulus/ monetary expansion from the monetary authority is useless in pushing up the real economic activity, or generating real demand, or reducing unemployment. These objectives can be achieved only if the governments, the fiscal authority, expand expenditure to bring economy wide balance in demand and supply. This will generate growth, take care of social security and other redistributional objectives and achieve full employment.

The expansion of fiscal expenditures by printing more currency or creating more money can work, like original Keynesian hypothesis, if it results into increased production of goods and services. However, delivering helicopter money which does not result into increased consumption and new investment in productive capacity is as ineffective as the monetary stimulus is.  In economies where this is not the outcome, there would neither be growth, nor inflation. Such fiscal expansion would also leak into increase in asset prices.

The MMT does not work for economy like India. In fact, the MMT is exactly similar to what India used to do in sixties to eighties- runaway expansion of fiscal expenditure financed by automatic monetisation of money. India witnessed excessive inflation during this period. India still has unsatisfied demand but constrained supply. If the MMT were to be applied in India today, the results would be very close to what India witnessed until 1990- low growth and high inflation.

Balancing Growth and Monetary Stability/Low Inflation in India

Monetary stability and low inflation are the two sides of same coin. These two objectives signify in fact one single objective. If there is low inflation, stability of money is there. If there is high or volatile inflation, the value of money is not stable.

Growth cannot be financed by only expanding money supply. The money expansion, which results in additional investment for creating capacity to produce goods and services for which there is demand in the economy for consumption or investment, only results in growth.

The rate of inflation growth is taken as the corresponding deterioration in the value of money. Inflation is measured by price indices. It is therefore important to have the right kind of price indices to have the right measure of inflation. There are issues with consumer price index which is used to measure the inflation. There are issues with the ways in which monetary expansion takes place in India. There are issues with the instruments which the RBI uses for managing monetary expansion.

Four major changes are needed in India’s policy framework for dealing with monetary expansion and for maintaining monetary stability in India.

First, the Consumer Price Index- Combined (CPI-C) is the index used for measuring the inflation in the country. There are serious issues with CPI-C which makes it quite and inappropriate index to measure inflation in the country. CPI-C takes into account prices of only a fraction of goods and services produced and consumed in the economy. The basket of goods and services included in CPI-C does not even make up half of the goods and services forming part of value added in India. There is excessive weight- about 55%- to food items. Services are mostly ignored. New economy goods- electronics etc.- are not part of the index basket.

The historical evidence suggest that CPI-C indicates much higher inflation than the wholesale price index (inflation reading of CPI-C is many times the inflation rating of manufactured products as per WPI) or the GDP deflator. The CPI-C should be replaced as monetary policy instrument by the GDP deflator, which now is available quarterly.

Second, the fiat currency era (1960s onwards) has had three major phases (in high income advanced countries) mirroring the impact of monetary expansion policies and changes in the underlying economic conditions- a. excessive monetary expansion and run-away inflation phase (until 1980s), b. constrained monetary expansion and controlled inflation (1980s-first decade of 21^st century) and c. no inflation irrespective of excessive monetary expansion (presently in action).

India is currently in phase II. Only the rich/high income countries seem to be in the third phase. If India were to relax the monetary rigour or follow prescription of MMT in imprudently expanding fiscal expenditure by monetising deficits, India would surely suffer ill-consequences of high inflation and low growth. India should therefore continue to follow a policy of maintaining money supply so as to maintain low and steady inflation.

Third, India has adopted formal inflation target of 4% (plus/minus 2%). Lot of evidence of failing monetarist theory suggest that the monetary instruments are not good enough to ensure achievement of inflation target. Stance of fiscal policy, demographic changes, state of poverty, demand-supply gap in the economy, profitability of investments, entrepreneurial incentives etc. are several other factors which have significant bearing on the inflation outcome.

The RBI, however, is sole authority as far as monetary expansion is concerned. The RBI should therefore be not held responsible for such a tight single inflation target. The inflation target should be redefined to be the range of 4-5% instead of a fixed point 4%.

Fourth, in a way, money is most stable if there is no inflation. Monetary authorities are most concerned about the monetary stability and therefore it is not unusual for monetary authorities to prefer no or low inflation and go for the overkill to achieve it. As inflation outcome is not available ex-post, the monetary authorities tend to assume higher inflation and then overshoot by over-tightening money supply and liquidity. RBI has consistently assumed higher inflation expectations than what later turned out to be actual inflation.

It is therefore advisable not to fix lower side of the inflation corridor too low. In India, it is 2% today. 2% is quite low. When used in the form of CPI-C 2% inflation has actually amounted to negative inflation in case of manufactured goods and almost no inflation in case of GDP deflator. The inflation corridor should therefore be fixed at 1% plus/minus the range of 4-5% i.e. 3%-6%.

Fifth, while RBI has not been actually held accountable for inflation overshooting the mandated inflation corridor, the reputational risk is quite there. The accountability should be refixed by holding RBI most accountable if the inflation goes down below lower bound of 3% and moderately accountable if the inflation goes beyond 6%. RBI should be rewarded handsomely if the inflation is maintained in the range of 4-5%.

Conclusion

The monetary stability or the low and stable inflation is a highly desirable policy goal. This aligns all incentives for investments and is equitable across all sections of society. Monetary stability can be stated only in terms of a inflation outcome and the inflation outcome can be measured only in terms of a price index. It is therefore extremely important to select/design the right price index to figure out whether there is excessive or volatile inflation.

India has had episodes of high inflation, the last being witnessed in 2008-2013 period, though the inflation have tended to trend lower since 1970s. The choice of Consumer Price Index- Combined is less than an optimal choice in India’s context as this Index has resulted in indicating a much higher inflation than the two other measures the wholesale price index and the GDP deflator. It is necessary to either redesign Consumer Price Index-Combined to more accurately reflect the inflation of all consumption and investment goods produced and consumed in the economy or use GDP deflator as the measure of inflation for monetary policy action.

Inflation is entirely the phenomenon associated with the fiat currency. There was no inflation in gold/silver standard economies. While the paper/fiat currency had several advantages and continues to be the only mode of money prevalent in all parts of the world, the mankind learnt at great cost how to ensure monetary stability in the fiat currency system. Three decades of 1970s-1990s were high inflation decades. By controlling money supply and adopting inflation targeting regimes, the world, most prominently in the advanced countries, has controlled the inflation demon. In fact, in many parts of the world, lack of inflation is the headache policy makers face.

By choosing the right inflation price index, refixing the target of inflation in the range of 4%-5% with a corridor of 1% i.e. in the corridor of 3% to 6% and holding the RBI more responsible if the inflation falls below 3% than if the inflation goes somewhat over 6%, we can design a good monetary policy framework to ensure low and stable inflation and monetary stability in the country.

 

 

SUBHASH CHANDRA GARG

NEW DELHI 05/10/2020